Sales of umbrellas and rainwear may provide the only bright spot for U.S. retailers during the month of April.
April retail sales were impacted by an unusual cold spell and the early arrival of Easter, which pulled some sales into March. Making matters even worse: The same period last year was unusually strong, making for a tough comparison, as consumers were encouraged to shop in April given unseasonably warm weather and a late-arriving Easter holiday.
April's same-store sales, or sales at stores open at least a year, will be posted by major retailers on Thursday.
"It was awful," said Paul Walsh, senior business meteorologist at Planalytics, referring to the weather's impact on April same-store sales. "The primary reason is because the comparisons are up against last year's, which were absolutely daunting."
Lazard's same-store sales index of 45 retail chains is expected to fall 0.9% in April compared with a 6.6% gain during the same month last year. That's the first monthly decline ever since the index was created in 1997, according to Lazard Capital Markets analyst Todd Slater.
"While March is the most important month of the quarter and was generally above plan, the downside in April will likely eat into earnings cushions and result in downward first-quarter earnings revisions," Slater said in a Monday research report.
The companies most susceptible to revisions, or those with "the most earnings risk," he said, include: Limited Brands, which owns Victoria's Secret and Express; Target; TJX,which operates TJ Maxx and HomeGoods; and Wal-Mart.
The good news? Sales trends improved during the last week of April and will continue to get better in May and June. And when April sales are combined with March, the underlying trends don't look as bad. According to Thomson Financial, same-store sales for the Easter season are expected to rise 3.2%, below last year's robust 4.2%. Excluding Wal-Mart, the average increases to 4.6%, better than 4.3% last year.
"This means that for the exception of Wal-Mart, most retailers are posting better (comparisons) during the Easter months than last year," said Jharonne Martis, a senior research analyst with Thomson Financial.
"While April is likely to be surprisingly soft, we believe it will prove to be the trough for the (year)," Lazard's Slater added. "Therefore, we believe retail stocks can recover their momentum in the near-term."
Here's a look at April retail sales forecasts for specific sectors:
The apparel sector is expected to fall 2.8% from last year, considerably lower than last year's decline of 5.8%, according to Thomson. Limited is expected to post the strongest results, with a 1.1% gain, followed by TJX, at 0.7%. Same-store sales at Gap , meanwhile, are expected to fall 7.1%. Demand for rainwear, however, was up 19% from last year, according to Planalytics, a weather analysis company that advises businesses.
High-end department stores' sales are expected to be healthy across the board, Thomson said, though the group is expected to decline 0.3% from last year. Same-store sales at Saks are expected to rise 6.8%, followed by Nordstrom (4.3%) . Sales at JCPenney , meanwhile, are expected to fall 0.8%. Bon-Ton and Kohl's are expected to post declines of 6.3% and 5.5%, respectively.
Sales at teen retailers are expected to drop 2.9% from last year, Thomson said. Zumiez is expected to register a 5.4% gain, followed by American Eagle , with a 1.3% rise.
The specialty sector, which includes some of the worst performers like Sharper Image , is expected to post the weakest performance: a drop of 9.6%. Same-store sales at Sharper Image are expected to plummet 25%, while Claire's is expected to decline 2.0% from last year.