U.S. Retailers' April Sales Dip on Earlier Easter (Update6)
By Heather Burke
May 10 (Bloomberg) -- U.S. retailers posted the biggest sales decline on record last month, trailing estimates that were already reduced as the coldest April in a decade curbed sales of lightweight clothing.
Wal-Mart Stores Inc., the world's largest retailer, said April sales fell 3.5 percent, trailing its forecast for a decline of at most 2 percent. Sales at stores open at least a year dropped at Federated Department Stores Inc. and Gap Inc.
Temperatures dipped 5 degrees below normal in the Northeast, cutting into sales of shorts and other spring apparel. The results may be further evidence that consumer spending, which accounts for two-thirds of the economy, is slowing.
``The consumer isn't dead but I don't think they are itching to open their wallets,'' said Eric Beder, an analyst at Brean Murray Carret & Co. in New York.
Easter was eight days earlier than in 2006, shifting purchases for the season into March. Analysts said the declines were caused mainly by one-time events, and most retailers maintained their profit forecasts.
The Standard & Poor's 500 Retailing Index of 30 companies declined 1.2 percent as of 4:15 p.m. New York time. It has risen 3.3 percent this year, compared with a 5.2 percent gain on the Standard & Poor's 500 Index.
Shares of Wal-Mart slipped 18 cents to $47.75 in New York Stock Exchange composite trading. Federated dropped $1.72, or 3.9 percent, to $42.10 and Gap declined 15 cents to $18.28.
Sales at 53 U.S. retail chains fell a combined 2.4 percent, the International Council of Shopping Centers said. The ``ugly'' decline was the largest since the New York-based trade group started keeping records in 1970, said ICSC chief economist Michael Niemira. The ICSC had forecast a ``small dip'' in April.
March sales climbed 5.9 percent, the biggest gain since April 2006, according to the New York-based ICSC. For March and April combined, rose 1.8 percent.
A record 80 percent of retailers missed analysts' estimates in April, according to Retail Metrics Inc. Same-store sales are an industry benchmark used to measure the health of older stores.
Goldman Sachs Group Inc. said its index of April sales, which tracks about 30 retailers, fell 3 percent.
Last month was the coldest April since 1997 in the U.S. and the snowiest in more than 14 years, according to Weather Trends International, a Bethlehem, Pennsylvania-based firm. Three- quarters of the U.S. had temperatures that were lower than normal, the firm said.
``April sales results were a distortion,'' said Steven Baumgarten, an analyst at PNC Wealth Management in Philadelphia. ``A lot of retailers planned for the weak April.'' The firm manages $54 billion, including shares of Wal-Mart and J.C. Penney Co.
Today's results confirm that consumer spending has slowed down, Niemira said today in an interview. U.S. consumers' confidence dropped to a seven-month low in April as concerns about fuel prices, inflation and home values intensified, according to the Reuters/University of Michigan's final index of sentiment released April 27.
The average price of a gallon of unleaded gasoline rose to $3.05 for the week ended May 7, the highest since September 2005, the U.S. Energy Department said. The National Association of Realtors this week lowered its projections for both new and existing home sales this year and said prices will decline.
Discounters' sales fell 4.6 percent in April, the ICSC said. Wal-Mart said cooler weather hurt demand. Sales this month and in the second quarter may rise 1 percent to 2 percent, the Bentonville, Arkansas-based company said today.
Target Corp., the second-largest U.S. discount chain, said April sales declined 6.1 percent, while analysts predicted a drop of 6.4 percent. The Minneapolis-based retailer said it was ``on track'' to meet its full-year financial goals.
Federated, the second-largest department store company, said sales at stores open at least a year declined 2.2 percent, missing analysts' estimate for an increase of 1.2 percent.
Chief Executive Officer Terry Lundgren said sales were disappointing at both its older stores and the former May Department Stores Co. stores it converted to the Macy's name in September. The Cincinnati-based retailer said sales in May would be unchanged to down 2 percent.
April sales at J.C. Penney, the third-largest department- store chain, fell 4.7 percent. Analysts expected a loss of 0.9 percent, according to Retail Metrics. The Plano, Texas-based retailer reaffirmed its first-quarter forecast.
Apparel retailers' same-store sales slumped 9.8 percent, ICSC said. Sales dropped 16 percent at Gap, the largest U.S. clothing retailer, missing analysts' estimate for a drop of 7 percent, according to data compiled by Retail Metrics, a Swampscott, Massachusetts-based research firm.
Limited, American Eagle
AnnTaylor Stores Corp., which sells to women ages 25 to 55, said April sales declined 12.8 percent and reiterated its full- year profit forecast of as much as $2.25 a share. Children's Place Retail Stores Inc. reported a 2 percent decrease.
American Eagle Outfitters Inc., a teen-clothing retailer, said yesterday that April same-store sales fell 10 percent. Analysts estimated an increase of 1.4 percent.
Sales at Seattle-based Nordstrom Inc. gained 3.1 percent, short of the analyst estimate of 4 percent. Neiman Marcus Group Inc. said sales rose 1 percent.
Saks Inc. said sales jumped 12 percent, helped by women's apparel, handbags and shoes. Results exceeded the 6.8 percent estimate. Saks forecast ``low-double digit'' growth for the second quarter.
U.S. retailers plan to report May sales on June 7. The ICSC forecast an increase of 2 percent to 2.5 percent. Sears Holdings Corp., the biggest U.S. department-store retailer, doesn't report monthly sales.