April Retail Results Boosted By Late Easter

According to the International Council of Shopping Centers, which tracks 28 major retail chains, excluding Wal-Mart, U.S. comparable chain store sales for April jumped 8.5 percent – two to three percentage points better than the ICSCs original forecasted growth range of between 5 percent and 6 percent. 

 

Excluding fuel sales, consolidated comps rose by 7.4 percent, meaning alternatively higher fuel prices contributed to 1.1 percentage points of the growth. For the two-month March/April period, which represents a more accurate depiction of market buoyancy due to the effect of the Easter shift, sales were up 5.2 percent, somewhat stronger than the 4.5 percent pace during the January/February period, according to the ICSC. Excluding fuel sales, retail comps grew by 4.2 percent for the two-month period.
Even as the highest consolidated comp jump in more than a year unfolded late last week, retailers promptly warned investors about the impending – and inescapable – impacts that rising costs will have on the remainder of 2011. Meanwhile, soaring fuel prices (gas is nearing $4.50 per gallon in some places) will have a dire effect on summer spending, and rising costs of raw materials – namely cotton – have forced many apparel manufacturers to pass costs on to the consumer.

 

Likewise, food prices have followed suit recently, as increasing fuel prices affect transportation costs and retailers have hiked up prices on fresh food for related reasons.  All of these factors, along with a recent report indicating jobless benefits are at an eight-month high, mean discretionary income will be at a premium as summer 2011 unfolds. Michael Niemira, chief economist and director of research for the ICSC said as much, warning in a recent report that fuel and food costs will continue to cut into discretionary income, tempering the chances of significant growth in the near future.

 

Andy Hall, president and CEO of Stage Stores (+15.1 percent) noted that while comps obviously spiked in April due to the Easter shift, the two-month growth trend was a much-more-modest 3.3 percent. While April sales benefited from the Easter calendar shift, rising gas prices made for a more cautious consumer, Hall noted.  As a result, our first quarter merchandise margins were negatively impacted by a softer-than-expected April and aggressive promotions throughout the quarter to make up for the loss of sales during the February clearance window.

At upscale discounter Target (+13.7 percent), which narrowly missed expectations, company Chairman, President and CEO Gregg Steinhafel said shoppers continued to be very cautious leading up to Easter. …(we are focused on) delivering an outstanding shopping experience. Steinfeld said in a statement. This is more important than ever for our guests as they face increasing pressure on their household budgets due to higher energy costs and increasing prices of food, apparel and home merchandise.  Target comps for March/Aril improved just 2.9 percent despite the April spike. 

According to the ICSCs comps report, apparel stores exhibited the strongest growth for the month, gaining 11.9 percent following a 1.6 percent decline in March. On a two month basis, the run-rate was 5.2 percent – stronger than its fiscal year-to-date gain of 4.5  percent.

Also of note, premium-priced teen retailer Gap, Inc. (+8.0  percent) far exceeded analysts expectation of a negative 0.8 percent trend during the month. In conjunction with Gaps April sales report, management said the company was forecasting Q1 earnings to be below initial estimates due to rising material costs and the impact of the earthquake in Japan – which is home to nearly all of the companys 150 Asian stores. Gap North America was up 2  percent; Banana Republic N.A. was up 11  percent; Old Navy N.A. was up 14  percent; and the International segment was down 1 percent. Of note, one highly-regarded analyst said Gap was struggling because of a lack of differentiated product, which deters many customers from paying higher prices related to climbing manufacturing costs.

For other mall-based teen retailers, aggregate comps grew an average of 12.1  percent for the Spring Break period. Of note, alternative-themed apparel retailer Hot Topic (+10.5  percent) outperformed expectations on a massive remodeling initiative by new CEO Lisa Harper, who has been closing underperforming stores and revamping others.

For Department stores, sales were strong throughout, although several missed analysts lofty expectations, including J.C. Penney Co. Inc (+6.4 percent) which fell short of expectations by about two  percentage points.  JCP management said the Southeast region generated the strongest sales for the month, but several other key regions dealt with unseasonable and poor weather, which hindered sales and dampened store traffic.  Kohls (+10.2  percent) missed projections as well, but management pointed to strong results from accessories, home and childrens items and strong sales in the Southeast and West regions. At Dillards, (+11.0  percent) comps improved 4 percent during the March/April period on strength from the Central region while Macys (+10.8  percent) exceeded forecasts on strong sales of new spring inventory.

For the Luxury sub-segment, business remained strong, although consolidated comps fell back to the pack, so to speak, due to strength from the rest of the market. Nordstrom (+7.6 percent) missed estimates slightly despite strength from childrens and mens clothing and mens shoes while Saks (+5.8  percent) fell significantly short, partially due to one day of a major promotion falling in May compared to the year-ago period, when the promotion ended in April.

For Discounters, comp growth was somewhat of a mixed bag, with Ross Stores (+10.0  percent and Target (+13.1  percent) surging double-digits and Stein-Mart (+4.2  percent) and The TJX Cos. (+5.0  percent) reporting more moderate growth. At Ross, results heftily exceeded analysts expectations on strong sales of Easter merchandise while management for the TJX Cos. (+5.0 percent) reported the later Easter helped offset severe weather in many U.S. and Canadian regions.

For the Warehouse Clubs, Costco (+12.0  percent) easily outpaced predictions despite a shorter selling period. Management said the shorter selling period was partially offset by shoppers buying more goods during the holiday week. Fuel sales impacted consolidated comps by 7  percentage points. For BJs Wholesale (+8.5  percent), strong sales of gas and groceries drove comps for the month, although results slightly missed projections. Management said customers showed an increased demand for fresh food, which is more heavily discounted at wholesales clubs.

Looking ahead, the ICSC expects comps to increase between 3  percent and 3.5  percent in May, excluding the price of fuel.

 

 

The Buckle reported April comps improved 14.5 on net sales that increased 18.7 percent to $69.4 million for the four-week fiscal month from $58.4 million in the year-ago month.

Mens sales, which represented 39.0 percent of total sales, were up about 20 percent on strength from denim, woven and knit shirts, active apparel and accessories. Revenues from the womens side, which represented 61.0 percent of total sales, were up approximately 17.9 percent.  Strong categories in the women’s side included denim, knit tops, active apparel, accessories and footwear. Price points on the mens side were up 5.5 percent, while womens experienced a 2 percent gain.

Combined footwear categories for men and women showed a 21.5 percent increase from the year-ago period while in similar fashion, combined accessories saw a positive 35 percent comp.  Sales from these segments accounted for approximately 7.5 percent and 6.0 percent of the companys total net sales, respectively. 

 

Zumiez Inc. reported comps for the four-week April period ended April 30 increased 117.5 percent on net sales that increased 24.8 percent to approximately $32.0 million from $25.7 million im march last year.

April  weekly comps were 13.8 percent, 11.1 percent, 38.5 percent and 6.6 percent for weeks one through four, respectively
On a pre-recorded call, company CFO Trevor Lang said dollars per transaction were down slightly due to a decrease in units per transaction which was partially offset by an increase in average unit retail.

During the four-week period, footwear, accessories, mens, juniors, hard goods and boys all posted positive comps.