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Spring likely 'too little, too late' for retail

They say that April showers bring May flowers. But will they also bring a sigh of relief to apparel stores?

Although retail sales figures from the Commerce Department on Monday posted their biggest gain since September 2012, clothing stores lagged behind other consumer goods sectors, particularly the automobile industry.

Further evidence of the category's weakness appeared in last week's same-store sales reports, when the apparel sector posted a 3.8 percent same-store sales decline, led by a 6 percent drop at Gap, according to Thomson Reuters data.

An employee folds clothes at a Uniqlo Co. store on 5th Avenue in New York.
Victor J. Blue | Bloomberg | Getty Images
An employee folds clothes at a Uniqlo Co. store on 5th Avenue in New York.

As retailers blamed the weather and a shift in the Easter holiday for the poor results, they pinned their first-quarter sales hopes on the month of April, saying pent-up demand and delayed holiday purchases should help them post stronger results for the month.

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But according to retail experts, April's expected bounce won't give a true reading on consumer demand—nor is it likely to be enough to save the quarter.

"A number of retailers have noted that when temperatures and weather conditions were more seasonal, sales were generally better," said Ken Perkins, president of consulting firm Retail Metrics. "This is likely going to be too little, too late, however, to salvage what are likely to be lackluster first-quarter retailer earnings."

Read MoreRetail sales torrid in March

BMO Capital Markets analyst John Morris said that April "appears to be off to a solid start," after the later Easter holiday weighed on March's comparable-store sales by about two to five points.

ShopperTrak data backed up Morris' observations, showing mall traffic rose slightly in the week ended April 12. Morgan Stanley's store checks further indicated that there was pent-up demand among consumers, as shoppers visited stores during periods of warm weather in March.

But the firm's store checks also revealed something troubling—heightened spring inventory levels at retailers such as Gap and Victoria's Secret parent L Brands, which reported an 11 percent rise in inventory per square foot. According to Morgan Stanley data, inventory growth for soft retail goods, which includes apparel and accessories, was already about 8 percent higher at the end of fourth quarter 2013.

This excess inventory could lead to further margin depreciation in an already promotional shopping environment—one that is still commonly offering consumers 30 and 40 percent off, Perkins said. The absence of strong fashion trends have made things even tougher for apparel retailers, who have seen consumers' dollars shift toward automobiles, home improvement projects and the sporting goods sector.

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"Overall, while we may see some pent-up demand unleashed in April, which may make trends appear stronger on the surface, we do not see this as ultimately sustainable," Morris said.

What's more, a survey by the National Retail Federation found that the average American celebrating Easter will spend less this year. Although the trade group predicts Easter spending will reach $15.9 billion, the average amount spent by a person feting the holiday is expected to be $137.46—lower than last year's $145.13 average.

Thomson Reuters is forecasting 1.2 percent same-store sales growth among retailers for the first quarter. Although that is higher than last year's 0.2 percent decline, it's below the healthy 3 percent mark, said Jharonne Martis, Thomson Reuters' director of consumer research. The apparel sector is expected to contribute a 0.5 percent decline.

"The news isn't good for apparel, or any other discretionary category, all of which are in the doldrums," said Craig Johnson, president of Customer Growth Partners.

—By CNBC's Krystina Gustafson

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