Chains report 2.4% drop in April sales, worst since '70

May 11, 2007|By Leslie Earnest | Leslie Earnest,Los Angeles Times

Nobody was expecting much from retailers in April. They delivered even less than expected.

Major retail chains across the United States reported yesterday a 2.4 percent decline in April sales, the weakest showing since at least 1970, according to the International Council of Shopping Centers.

Weak performers cut through all segments of the industry. They included Wal-Mart Stores Inc., which recorded a rare drop in business, as well as Abercrombie & Fitch Co. and Federated Department Stores Inc.

"Consumers are feeling pressured by higher gasoline prices and a sluggish housing market, particularly low- and middle-income consumers," said Ken Perkins, president of RetailMetrics LLC, a research company in Swampscott, Mass.

Analysts had expected last month to be weak after an early Easter motivated many consumers to do their holiday shopping in March, siphoning away part of April's business.

But sales were much softer than expected, raising concerns that retailers will also see disappointing results in the months ahead.

The UBS-International Council of Shopping Centers sales tally posted a decline of 2.3 percent, the biggest drop since the index started tracking the data. The tally is based on same-store sales or sales at stores open at least a year, which are considered a key indicator of retailers' health.

For March and April combined- which provides the best read on the spring selling season - the tally was up a modest 1.8 percent, below the 2.8 percent forecast.

Michael P. Niemira, chief economist at the council, which tallied results from 53 chains, said it was the weakest spring performance since 2003, when the tally registered a 1.5 percent gain for the two-month period.

While analysts will be closely watching how May fares since the month will provide a better indication of consumer spending, concerns are rising that shoppers can no longer bear the weight of the economy's woes.

"The slowdown is at hand," Niemira said.

Wal-Mart posted a 3.5 percent decline from a year earlier, its worst reading since at least November 1991. Competitor Target Corp. reported a 6.1 percent drop.

Of the chains monitored by Thomson Financial, 85 percent missed expectations for same-store sales, a key measure that tracks results at locations open at least a year.

Pacific Sunwear of California Inc., which sells many surf and skate apparel brands made by Southern California companies, posted a 16.5 percent slide last month from April last year. That prompted the retailer to lower first-quarter profit expectations.

Gap Inc. of San Francisco said same-store sales fell 16 percent as the parent of more than 3,100 Gap, Old Navy and Banana Republic stores reported sinking results from all its chains.

Sharper Image Corp. surprised analysts with an 11 percent decline, which was much less than the 25 percent drop they had expected. The San Francisco-based seller of gadgets has been gripped by an extended sales slump.

When measured as a group, teen retailers offered the grimmest results, with sales falling 11.1 percent from a year earlier.

Wholesale clubs notched the best performance, a 4.6 percent increase. In that group, Costco Wholesale Corp. led the pack, rising 7 percent.

Luxury chains also buoyed the industry, collectively rising 4.3 percent. Saks Inc. posted an 11.7 percent jump, and Nordstrom Inc. rose 3.1 percent.

Leslie Earnest writes for the Los Angeles Times. The Associated Press contributed to this article.

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