April's retail sales up 6.7%

Easter shoppers give leading chains pleasant surprise

May 05, 2006|By NEW YORK TIMES NEWS SERVICE

Sky-high gas prices met their match in April: the Easter holiday. And Easter won.

American retailers reported their best monthly sales results in two years yesterday, buoyed by a later-than-usual Easter that nudged purchases of such items as dresses and hams from March to April.

Results for stores open at least a year rose an unusually high 6.7 percent compared with the period a year ago, according to Goldman Sachs.

Several retailers, including Target (up 10.4 percent), Kohl's (up 13.4 percent), and American Eagle Outfitters (up 19 percent), posted sales gains nearly twice their monthly average for the year.

The International Council of Shopping Centers, a trade group, heralded the arrival of an "energized Easter bunny" in April, as consumer spending hit its highest level since March 2004, when sales rose 7 percent.

But retail analysts cautioned that April's buyers might not deliver with the same vigor in May. Michael P. Niemira, chief economist at the trade group, credited at least 1.5 percentage points of April's sales increase to Easter holiday spending, and he foresaw a far less rosy picture for this month.

"The sharp rise in energy prices in recent weeks is likely to catch up" with consumers, he wrote in a research report that predicted retail sales would rise 3 percent to 3.5 percent in May.

Retailers have battled rising energy prices all year but had hoped for relief this spring in the form of warmer weather and, with it, lower home heating bills.

Instead, higher heating bills have been replaced by higher gasoline prices.

Ken Perkins, research analyst at Retail Metrics, expects May's sales increase "to be more moderate."

Just how late was Easter this year? Twenty-one days; it fell on April 16, compared with March 27 in 2005. The resulting April sales bump stretched across the industry, from discounters to department stores

Sales at Wal-Mart Stores Inc., the nation's largest retailer and one that caters to low-income customers, rose 6.8 percent - with the greatest gains at its namesake stores, where sales rose 7.3 percent. Sales rose 3.8 percent at its Sam's Club unit.

With 130 million Americans shopping at its stores every week, Wal-Mart is viewed as a strong barometer of consumer sentiment, and its robust performance indicated that shoppers splurged.

Thomas M. Schoewe, chief financial officer at Wal-Mart, said "rising fuel costs were overshadowed by the customers' response to merchandise" like toys and candy, two Easter staples.

Target, noting brisk sales of toys and children's apparel, said sales rose 10.4 percent. Kohl's, whose monthly sales have grown, on average, 6.8 percent in 2006, posted a 13.4 percent gain.

Talbot's, with average gains of 0.5 percent this year, said sales grew 10.8 percent last month.

And Dillard's, which averaged increases of 2.7 percent this year, reported a 10 percent jump.

Strong Easter sales are not unusual. In fact, some retailers suggest that March and April sales results be averaged to reflect underlying demand rather than the impact of holiday spending.

For several long-suffering retailers, however, April did not provide much of a lift.

Saks, the luxury retailer, said sales rose 2.2 percent, well below those of its rival Neiman Marcus, which had a 9.5 percent increase for the month.

Sales dropped 0.8 percent at Federated Department Stores, owner of Macy's and Bloomingdale's.

The teenage clothing sector, a market that swings up and down depending on which tank top or pair of distressed denim pants is hot, swung up in April. Sales rose 17 percent at Abercrombie & Fitch, slightly below the performance of American Eagle.

Stifel Nicolaus analyst Richard E. Jaffe said American Eagle forecast all the right trends for April, favoring a cleaned-up version of last year's ragged denim pants, for example, and T-shirts emblazoned with large graphics. "Eagle," he said, "is getting it right."

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