Later Easter Drives Retail Sales in April

Retailers posted modestly higher sales in April as warmer temperatures and a later Easter holiday helped push shoppers into stores.

Thursday's results marked the second consecutive month that same-store sales--an industry metric that gauges sales at stores open at least a year--have topped expectations.

Only regional discounter Fred's Inc. posted lower sales and missed estimates of the seven retailers tracked by Thomson Reuters that have reported monthly metrics so far.

But given the shifting Easter holiday, John Tomlinson, managing director and head of retail at ITG Investment Research Inc., said May will likely give the first clear read on most retail trends.

Several industry watchers had forecast a pickup in spring shopping amid pent-up demand following a harsh winter season. And results from March and April are generally viewed together because of the shifting nature of Easter, which fell about three weeks later this year and moved into April from March last year.

Consumers continued to spend on big-ticket items as well in April, as car buyers shrugged off concerns about the tepid economy and streamed into U.S. auto dealerships, helping most car makers to post higher new-vehicle sales.

Overall, the seven retailers tracked by Thomson Reuters posted a 4.6% increase in April same-store sales, with Gap Inc. expected to report after the market closes. Thomson Reuters projects the eight companies to record 2.8% growth versus a 4.3% increase a year earlier.

For the two-month period, retailers reported 3.4% growth, down from 3.5% a year earlier.

Many retailers, including the major department stores and most big-box retailers, stopped reporting monthly sales data some time ago, making it difficult to get a snapshot of the entire industry. However, many retailers will be releasing their quarterly results and outlooks in the next few weeks, which should help give a clearer picture of the health of the sector.

L Brands Inc., formerly Limited Brands, said same-store sales rose 8% last month, beating consensus estimates for a 4.3% increase, as the company said the later Easter holiday benefited results. The company also boosted its quarterly earnings outlook and noted that lower promotional activity helped boost margins at some of its brands.

By brand, Victoria's Secret reported an 8% increase in sales, topping expectations for 4.7% growth, while Bath & Body Works' same-store sales improved 8% when a 3.3% increase was expected.

Costco Wholesale Corp. reported a 5% increase in April same-store sales, excluding gasoline, exceeding estimates for 3.2% growth. Unlike some of its peers, Costco's results were hurt by the later Easter holiday since it led to one less selling day in the month.

Top performing categories at Costco included automotive, tires, hardware, apparel, housewares and jewelry, though some of this strength was offset by weaker performance for the office category. The company also said same-store sales for consumer electronics were slightly negative for the month.

Among teen retailers, Zumiez Inc. reported an 8.2% jump, handily topping expectations for a 0.5% increase. Buckle Inc., meanwhile, reported a 0.8% sales increase, while analysts had expected a 0.2% decline.

Off-price retailer Stein Mart Inc. called out warmer weather as it said same-store sales rose 8.9% in April, when 4.5% growth was expected.

Meanwhile, Fred's said same-store sales fell 2.3%, missing expectations for 2% growth, and the discount retailer cut its quarterly sales and profit outlook. Strength in the company's pharmacy department, was offset by a sales shortfall in other general merchandise departments, Chief Executive Bruce Efird said.

The company said it expects same-store sales to begin growing again in June and said it is working to implement a new marketing strategy.

Write to Anna Prior at [e-mail]

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