April 5, 2012
NEW YORK — Retailers from discounter Target to department-store chain Macy’s reported better-than-expected sales in March in the latest sign that Americans are feeling better about the economy.
A combination of warm weather and high demand for spring fashions boosted revenue for the month, but analysts say there’s much more than higher temperatures at play. Americans have continued to cut back on spending in the slow economic recovery, but they’re starting to be encouraged by the improving job market.
“Retailers are benefiting from an improving employment and consumer confidence picture,” said Ken Perkins, president of Retail Metrics, a research firm.
Only a handful of retailers report monthly figures, but industry watchers say there’s reason to be optimistic because the numbers offer a snapshot of consumer spending, which accounts for more than 70 percent of all economic activity.
Overall, revenue in stores open at least one year — an indicator of a retailer’s health — rose 4.1 percent, according to a preliminary tally of 22 retailers by the International Council of Shopping Centers, within the range of the group’s estimates. And retailers catering to customers in all income brackets had monthly gains that beat expectations.
The strong sales reports follow other positive economic signs. The housing market had its best winter in five years. Consumer confidence was relatively flat in March, but near February’s 12-month high. And on Friday a government report on March job growth is expected to show the fourth straight month of strong hiring.
The positive economic news coupled with unseasonably warm weather boosted the results of everyone from outdoor sports retailer Zumiez to luxury chain Nordstrom to Limited Brands Inc., which owns Victoria’s Secret and Bath and Body Works.
Macy’s, which owns the Macy’s and Bloomingdale’s department chains, continued its strong monthly performances, reporting that revenue figure rose 7.3 percent, which beat analysts’ expectations of a 4.8 percent rise.
As a result, the company raised its forecast for revenue in stores open at least one year during the combined March and April period, to a 4.3 to 4.5 percent rise, from prior guidance of 3 to 3.5 percent rise.
Even Gap Inc., which had been struggling recently, reported gains. In fact, the retailer, which owns Gap, Old Navy and Banana Republic, was one of the biggest success stories of the month.
Revenue in stores open at least one year rose 8 percent, better than the 5.4 percent rise analysts polled by Thomson Reuters expected. That includes a 9 percent rise at namesake stores, an 11 percent rise at Old Navy and a 5 percent rise at Banana Republic.
“We delivered solid sales performance in March and are pleased with customer response to product across all brands,” said CEO Glenn Murphy.
While March revenue figures are encouraging, analysts caution that retailers should not count their eggs before they hatch.
After all, gas prices — hovering around $4 — continue to weigh on consumers and that hurts stores that cater to lower-end shoppers. Drug-store Walgreens and lower-end department stores Bon Ton Stores Inc. and SteinMart all both reported a decline in revenue in stores open at least one year in March.
Analysts also say a more accurate picture of Americans’ spending will emerge after April since an earlier Easter holiday this year likely pushed some sales into March.