U.S. retailers beat March sales expectations(69867)

U.S. retailers fared well in March

Shoppers opened their wallets even wider than expected in March, snapping up spring fashions and home furnishings and paying full price for much of what they bought, retailers reported Thursday.

Analysts had expected that warm weather and an early Easter would boost results compared with last year, when recession-scarred consumers were willing to buy only basics, and only on sale.

But the results were even better than they had forecast, and hit double-digits at some chains, including midlevel department store Kohl's Corp., where sales at stores open at least a year jumped 22.5%.

Luxury retailers, which were particularly hard-hit by the recession, also reported strong sales; the high-end department store Nordstrom Inc. led the pack with a 16.8% increase in sales.

Saks Inc. reported a 12.7% same-stores sales gain in March. Sales at Neiman Marcus Inc.'s namesake stores and Bergdorf Goodman rose 9.2%, with top-selling merchandise including women's clothing and shoes, handbags and jewelry.

But while retailers say they are heartened by shoppers' more upbeat mood, they remain somewhat cautious in the face of high unemployment.

"We are celebrating strength of the first quarter, but we are not taking anything for granted," said Gregg Steinhafel, chief executive of the discounter Target Corp. "I think the rest of the year's sales will have ups and downs, but the general trend line will be up."

Target's sales jumped 10.3% in March, with sales of clothing rising by an even larger percentage, evidence that shoppers are no longer buying just low-margin basic goods. In fact, the company reported strong sales of its flowery new Liberty of London line of clothes, pillows and other household goods.

Last year, Target, which sells a lot of discretionary merchandise rather than must-buy staples, saw its March sales tumble 6.6%.

Citing strong spring results this year, the company said it expects its earnings per share to come in 10 cents higher than the 74 cents a share analysts have been predicting for the quarter ending May 2. Several other retailers also increased their earnings estimates.

On average, same-store sales jumped 8.7% for the month, according to an index of 29 retailers tracked by Retail Metrics Inc. of Swampscott, Mass. Analysts had expected a 6.1% increase in the index, which doesn't include the nation's largest retailer, Wal-Mart Stores Inc.

"It's a blow-out month, the biggest monthly increase we've seen since we began tracking monthly retail sales in 2000," said Ken Perkins, president of Retail Metrics.

Consumers are "beginning to feel better about their plight, evidenced by their spending on more discretionary items like apparel, accessories and home furnishings," he said.

After Macy's Inc. reported a 10.8% gain for March, its fourth consecutive increase, Chief Executive Terry Lundgren said, "We feel good about the trend and current performance."

Still, he noted that the economy remains fundamentally weak and retailers are still a way off from fueling their business by adding workers and investing capital.

Experts say this cautious attitude makes sense. "With unemployment numbers still high, consumers paying off debt and what uncertain Washington policies like health care will mean for disposable income, there will still be bumps in the road," said Madison Riley, managing director of North America for retail consultancy Kurt Salmon Associates.

Indeed, mall shoppers still express wariness about spending. In Dallas, Shannon Thomas, owner of a local funeral home, stopped by NorthPark Center last weekend to buy a pair of jeans at the Gap. "When I shop now, I buy exactly what I need and then head home," she said.

Some analysts said they will need to see relatively strong sales in April as well before they are convinced that consumers are truly more optimistic and that the March results were not mostly due to the early arrival of Easter on April 4.

Discounters that posted relatively strong results last year, before the recession showed signs of easing, continued to do well this March.

TJX Companies Inc., which owns T.J. Maxx and HomeGoods stores, notched a 12% same-stores sales gain on top of a 2% rise in the year-ago period. It raised its first-quarter earnings guidance to between 76 cents and 79 cents a share from 60 cents and 65 cents a share.

U.S. retailers beat March sales expectations

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