Retail Sales Broadly Miss Estimates During Cold March
Retailers broadly missed analysts' estimates for same-store sales in March, a month that typically sees cold weather and slow hiring in the early weeks.
So far, 63 percent of retailers who reported results fell short of Wall Street's estimates for sales at stores open at least a year, a key industry metric, according to the Thomson Reuters same-sales index, released Thursday. Excluding Walgreen and Rite Aid, whose results are heavily skewed by prescription drug sales, forecasters were expecting a jump in same-store sales of 2.2 percent, slowing from the blistering pace of 7.1 percent in March of last year.
Costco Wholesale reported a slightly smaller-than-expected rise in same-store sales, hurt by weak international results and lower gas prices, while Victoria's Secret parent L Brands posted better-than-expected sales at all of its chains.
Costco fared better in the U.S., where sales at stores open at least a year rose 5 percent, largely in line with expectations. Small appliances, jewelry and fresh food logged some of the biggest gains.
L Brands saw continued improvement at its La Senza chain, as well as an unexpected rise in same-store sales at Bath & Body Works. Company-wide, same-store sales rose 3 percent; Wall Street had been expected flat results, according to Thomson Reuters.
Analysts had been expecting 13 top U.S. retailers, including Gap, to post a 1.8 percent rise in same-store sales for March, according to Thomson Reuters, down from a rise of 2.9 percent in March 2012.
T.J. Maxx parent TJX reported that comparable-store sales fell 2 percent, more than the 1 percent drop analysts had forecast.
Industry watchers have been concerned that a tightening employment market could hurt consumer spending. The U.S. labor market recovery showed signs of losing momentum in March, as employers hired at the weakest pace in nine months.
But consumers seemed not to notice. U.S. consumer sentiment jumped in the second half of March by a record amount, on what was thought to be an improving job market, a survey by Thomson Reuters/University of Michigan found.
Still, retailers were hampered by an unusually cold start to March, prompting many shoppers to put off buying warmer-weather clothing.
"We believe retailers have struggled to convert customers to full spring buying mode," Janney Capital Markets analyst Adrienne Tennant wrote in a note this week.
The earlier timing of the Easter holiday this year is also likely to have hurt March numbers, but the business will show up in the April results.
Low-priced specialty clothing chain Cato blamed both those factors for an 11 percent drop in same-store sales.
Last week, Rite Aid reported overall same-store sales fell 2 percent, but sales of general merchandise, a closer proxy to consumer discretionary spending, rose 3.8 percent.
Larger rival Walgreen reported a modest 0.7 percent gain in same-store sales in March, with a better showing for its front-of-the-store merchandise, which beat expectations.