Retailers’ sales expected to slow in April

Posted by on May 3, 2012 in News | Comments Off

Retailers’ sales expected to slow in April

NEW YORK (MarketWatch) — After warmer weather and the timing of Easter boosted retailers’ sales in March, colder weather along the East Coast toward the end of the month likely slowed sales in April, analysts said.

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Ahead of retailers’ same-store sales reports on Thursday, analysts expect sales in April to rise 1.5%. That compares with an 8.7% gain in the year-earlier period, Retail Metrics data showed. In March, sales excluding a decline at drugstore chain Walgreen Co. jumped 6.5%, with about two-thirds of retailers topping estimates. Read more about Easter’s timing lifting retailers in March.

“We expect to see a significant downshift in same-store sales in April” against tough year-earlier comparisons and the impact of weather, said MKM Partners analyst Patrick McKeever.

Because the timing of Easter affected the sales outcome for March and April, analysts said the two months’ results combined would be a better gauge of consumer demand. Retail Metrics data showed that retailers are expected to report a 2.9% increase when March and April sales are combined.

“Retailers faced several significant headwinds” in April, said analyst Ken Perkins at Retail Metrics.

In addition to Easter arriving more than two weeks earlier this year than last year, which drove sales to March, warmer weather in February and March also pulled forward demand for spring merchandise, he said. Meanwhile, Mother’s Day falls about a week later this year, also likely pushing marginal sales out of April and into May.

Some economic indicators also have been discouraging. The number of Americans who applied for jobless benefits remained at an elevated level, raising concerns about potential weakness in the U.S. labor market. Read more about jobless claims.

Cold weather toward the end of the month along the East Coast also may have deterred consumers from buying swimsuits, shorts and spring dresses.

“Cold air remained in place through the balance of the week along the East Coast resulting in the coldest final week of a retail April in 21 plus years for both the Northeast and healthcare mall

Southeast, a big negative for spring categories,” said Weather Trends International.

The percentage of consumers who said they didn’t shop the past week was at its

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highest level since the end of March, according to a consumer tracking survey by International Council of Shopping Centers and Goldman Sachs.

Still, with stores stocking brightly colored attire that has helped drive demand in February and March, some analysts are more hopeful.

“We believe retailers continued to experience robust sales trends in April despite the impact of the Easter shift,” said Citigroup analyst Deborah

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Weinswig, adding the Easter timing likely hurt sales by 1.5 percentage points to 2.5 percentage points. “Consumers continued to respond well to the fashion and color on the floor.”

Because of Easter’s impact, May will provide a more solid read on whether demand has continued for summer merchandise, analysts said.

“Focus will really be on May results to see how summer selling is faring,” Perkins said. “A strong May would go a long way toward allaying


fears of yet another economic double dip.”

Discounters likely outperformed in April, posting a gain of 4.2%, Retail Metrics data showed. Department stores likely lagged behind with a 1.9% increase. Teen apparel retailers’ sales inched up 0.2% on average. Drugstore chains were expected to fare the worst, posting a 3.4% decline, Retail Metrics data showed.

Among individual retailers, Victoria’s Secret parent Limited Brands Inc., after reporting a 20% sales increase a year earlier, likely will show a total sales gain of 3.9%, including a 5% jump from the lingerie chain, Retail Metrics data showed.

Gap Inc. , on other hand, will likely post a 0.8% decline. Gap had posted its second straight monthly increase in March sales since a sales gain in June.

T.J. Maxx parent TJX Cos. and Ross Stores Inc. , retailers that sell discounted namebrand merchandise, will likely post gains of 3.5% and 3.3% each.

Among the teen segment, Zumiez Inc. likely saw a 6.9% sales increase while Wet Seal Inc. a 9.2% decline.

Luxury retailers Nordstrom Inc. and Saks Inc. are expected to see gains of 6.2% and 5.6% each, continuing to outpace their department-store counterparts. Analysts expected Macy’s Inc. to report a 1.9% increase while Kohl’s Corp. is expected to see a 0.9% decline.

Costco Wholesale Corp. is expected to outpace in the discount group with a 5.4% increase. Analysts expected Target Corp. to report a 2.8% increase. Wal-Mart Stores Inc. no longer reports monthly figures.