NEW YORK -- An early Easter holiday, a cold, damp month and a recession-wary consumer combined to ring up dismal March sales results for U.S. retailers.
Wal-Mart Stores Inc, Target Corp,Kohl's Corp, and Gap Inc reported lower-than-expected sales on Thursday as consumers stuck to purchases of basic items, and the shopping days ahead of Easter were too chilly for many shoppers to think about buying dresses or sandals.
But all was not gloomy — Costco Wholesale Corp and BJ's Wholesale Club Inc were bright spots in the otherwise dreary month. Their sales were stronger than expected as shoppers headed to warehouse locations to fill their tanks at the clubs' less-expensive gas stations.
"Any discretionary-related type retailers really took it on the chin this month," said Ken Perkins, president of Retail Metrics Inc. "We are seeing a significant slowdown here in consumer spending. It really seems to have picked up steam in the last couple of months."
Retail Metrics' same-store sales index fell 0.4 percent in March. It was the worst performance since April of last year, Perkins said, when retailers reported the weakest April sales on record.
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While Wal-Mart's 0.7 percent rise in March sales at U.S. stores open at least a year missed Wall Street's estimate of a gain of 0.9 percent, the world's largest retailer raised its first-quarter earnings forecast, citing expense controls and fewer markdowns.
Its shares rose 1.6 percent to $55 in morning New York Stock Exchange trade on Thursday.
CONSUMERS CAN'T KEEP CONSUMING
The ability of U.S. consumers to keep spending is being tested by rising food costs, high gasoline prices, falling home values, a credit market crunch and a weakening job market.
With consumers worried that the economy either is in, or is teetering on, the verge of recession, they are passing over purchases of nonessential items, like furniture, clothes or jewelry, in favor of basics, like detergent and pasta sauce.
Wal-Mart said sales of food, consumables and dry grocery items at its discount stores were strong during the period.
Meanwhile, under other circumstances, Easter shopping could have boosted March sales results, spurring early consumer demand for spring merchandise.
But the holiday was March 23 this year, the earliest Easter in 95 years, and it came during a cold, wet month when many consumers were still wearing coats, sweaters and boots.
It was the snowiest March in 12 years and the wettest in 10 years, according to Weather Trends International.
That gave cash-strapped shoppers an easy excuse to pass on purchases of spring clothing, and apparel retailers Abercrombie & Fitch, Chico's FAS, and American Eagle Outfitters Inc posted sales declines that were bigger than Wall Street expected.
Gap's sales at stores open at least a year plunged 18 percent, hurt by weak sales in its Old Navy women's clothes and lower promotions at its namesake brand.
Department store operators also had a rough month. Kohl's, Dillard's Inc, Nordstrom Inc and Saks Inc all reported steeper-than-estimated drops in sales.
J.C. Penney Co Inc's same-store sales fell 12.3 percent. Its Chief Executive Myron "Mike" Ullman told reporters at the World Retail Congress in Barcelona that he did not see conditions improving before the end of the year.
"I don't think we're very optimistic about it ending any time soon," he said.
EASTER SHIFT CLOUDS RESULTS
Analysts cautioned March sales could look especially weak because retailers face tough comparisons to a year ago, when same-store sales rose 6 percent, according to Retail Metrics.
Last year, Easter fell on April 8 meaning sales of holiday-related items came largely during March. But last year, the holiday landed late enough in the monthly reporting period to generate strong sales of spring merchandise.
With the Easter calendar shift affecting March and April sales every year, many analysts say that simply looking at March alone could paint too bleak a picture.
But this year, they also said that looking at April sales alone may paint too rosy a picture.
"The numbers will look better next month, but we wouldn't read too much in that either," Perkins said. "If you take these numbers together, we would expect continued softness in May and June."
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