Sales at clothing chains including Limited Brands Inc. and Gap Inc. fell less than analysts anticipated in March as spring promotions lured shoppers looking for fashion deals.
Revenue at Limited stores open at least a year fell 9 percent, the company said yesterday, less than the 12 percent average decline estimated by analysts in a survey by Retail Metrics Inc. Gap’s sales dropped 8 percent, beating the projected 10 percent slide, after its Old Navy stores exceeded analysts’ expectations.
Retailers that can cut prices are attracting consumers looking to spend less and their sales declines may be starting to level off, according to Patricia Edwards, founder of the research firm Storehouse Partners LLC in Bellevue, Washington. Specialty and high-end department stores that don’t have costs under control may have further to fall, she said.
“Just because we’re hitting bottom doesn’t necessarily mean we’re going to rebound immediately,” Edwards told Bloomberg Television yesterday. “It means that perhaps the free-fall is over.”
Gap, based in San Francisco, rose 68 cents, or 4.7 percent, to $15.09 yesterday in New York Stock Exchange composite trading. Columbus, Ohio-based Limited, owner of the Victoria’s Secret chain, added $1.08, or 11 percent, to $10.67, its largest one-day gain in a month.
Teen Fashion
Teen-fashion chains American Eagle Outfitters Inc. and Aeropostale Inc. raised their profit forecasts yesterday. Hot Topic Inc., another youth-oriented chain, increased its projection April 8.
American Eagle increased the low end of its first-quarter forecast to 6 cents a share from 4 cents, keeping the high end at 7 cents, citing an ability to control promotions. Aeropostale boosted its outlook to 32 cents a share from a previous high of 24 cents, saying March results were stronger than it expected.
TJX Cos., the owner of T.J. Maxx and Marshalls, said first- quarter earnings per share will meet or slightly beat the 38- cent high end of its forecast because of March sales and an extra selling day. Same-store sales rose 2 percent last month; Retail Metrics had projected a decline of 2.6 percent.
TJX, based in Framingham, Massachusetts, may have benefited from the shift in Easter to April this year from March in 2008, when it was closed for the holiday, giving it one additional selling day last month, according to Ken Perkins, president of Swampscott, Massachusetts-based Retail Metrics. Easter falls on April 12 this year; it was on March 23 in 2008.
American Eagle, based in Pittsburgh, jumped $1.47, or 12 percent, to $13.98 in New York trading yesterday, the biggest one-day gain since March 2006. TJX climbed 88 cents to $27.58. New York-based Aeropostale rose 12 percent to $30.22, the largest advance since Jan. 2.
Low Inventory
Large discount chains didn’t fare as well as the clothing stores. Wal-Mart Stores Inc. said revenue from U.S. stores open at least a year advanced 1.4 percent in the five weeks ended April 3. The Retail Metrics estimate was for a 3.2 percent gain. The retailer said it expects quarterly sales gains to be at the high end of its forecast of 1 percent to 3 percent.
Sales at Costco Wholesale Corp. stores open at least a year fell 5 percent in the five weeks ended April 5, the warehouse chain said. Retail Metrics’ estimates called for a 2 percent decline. A stronger dollar helped push revenue down 13 percent at non-U.S. locations.
Jobless Rate
Retail Metrics said total comparable-store sales dropped 1.6 percent in March. Excluding Wal-Mart, the world’s biggest retailer, sales declined 4.8 percent.
The U.S. unemployment rate climbed in March to the highest level since 1983 and the economy lost more than 650,000 jobs for a fourth consecutive month, a sign renewed reductions in spending might slow a recovery.
“Weak labor-market conditions will result in consumer spending being weak throughout most of 2009,” Conrad DeQuadros, senior economist at RDQ Economics LLC in New York, said last week.
Confidence among U.S. consumers stayed near a record low in March, indicating the economy remains deep in a recession. The Conference Board’s confidence index rose to 26 from 25.3 in February, the lowest reading since data began in 1967.
Department Stores
Department-store sales continued to decline as the chains slash prices on perfume, handbags, shoes and clothes to attract budget-conscious consumers.
Dillard’s Inc. said sales plummeted 19 percent, more than twice as much as the average projected 8.7 percent decline. Saks Inc. sales fell 24 percent, missing the 20 percent drop predicted by analysts.
Low inventory levels may have helped some profit margins in March, according to Brian Sozzi, an analyst at research firm Wall Street Strategies in New York.
“A lot of these companies are running on next to no inventory, so the markdowns I would assume are not as pronounced as I was expecting coming into the month,” Sozzi said yesterday in a telephone interview.
Americans may trim purchases by $1 trillion a year even after the recession ends as they adjust their spending habits, according to a survey by AlixPartners LLP, which advises firms on restructuring.
The International Council of Shopping Centers said March same-store sales fell 2.1 percent, more than its estimate of as much as 1 percent. The New-York based trade group, which measures sales at about 40 retail chains, said the Easter shift hurt results last month.
Adjusting for calendar changes, sales climbed about 1 percent, Michael Niemira, ICSC’s chief economist, said yesterday in an e-mail. Sales in April also may climb as much as 1 percent, the council said yesterday in a statement.
U.S. retail store traffic may fall about 13 percent in the second quarter, matching a drop in the first, as consumers cut spending on discretionary purchases, Chicago-based research firm ShopperTrak RCT Corp. said today in a statement.
