UPDATE: Retailers Post Solid April Sales, But Stay Cautious

U.S. retailers showed continued momentum in April, posting strong sales with the aid of the Easter holiday, but some caution prevailed in the midst of uncertainties consumers face.

Comments from retailers about rising gasoline prices, still high unemployment and hikes in retail prices because of greater raw material costs cast a bit of a pall on the month.

The 25 retailers tracked by Thomson Reuters showed an 8.9% sales gain for April at stores open more than a year, also known as same-store sales. The results beat analysts' expectations for an 8.4% rise and were the best showing in a year. The figures, however, were erratic, with a number of high profile retailers missing expectations.

Target Corp. (TGT) posted a 13.1% rise in April same-store sales, just beneath the 13.2% that analysts expected. The mass merchant said the results were somewhat below its own expectations as consumers were "very cautious" in their spending up until Easter. Chief Executive Gregg Steinhafel added that customers "face increasing pressure on their household budgets due to higher energy costs and increasing prices of food, apparel and home merchandise."

Among department stores, J.C. Penney Co. (JCP) reported a 6.4% rise in same-store sales, when 8.5% was expected. The retailer still raised its first-quarter guidance based on its overall performance during the period. During April, J.C. Penney said that while overall transactions rose, prices were flat and shoppers bought less each trip. Kohl's Corp. (KSS) said same-store sales increased 10.2%, below analysts' projections for 15.1%. Kohl's did say it sees first quarter earnings towards the high end of its earlier projection. Macy's Inc. (M) posted a 10.8% rise in comparable-store sales, besting expectations for 8.1%.

Luxury retailers lost momentum, with Saks Inc. (SKS) reporting a 5.8% rise, when 10.3% was expected. Saks said the shifting of a sales event had an impact on April sales. Nordstrom Inc. (JWN) posted a 7.6% rise, shy of expectations for 8.1%.

Gap Inc. (GPS) continued to struggle. Its announced drop in same-store sales was joined by a disappointing earnings outlook on "significantly down" merchandise margins and the departure of a senior executive--the president of global design for its adults and body categories.

Among the stronger performers, warehouse club Costco Wholesale Corp. (COST) posted a 12% rise in April same-store sales, ahead of expectations for 8.9%, despite being closed on Easter. Costco operates gasoline stations at its sites and said higher fuel costs, as well as strength in foreign currencies, aided results.

Limited Brands Inc. (LTD) remained robust, posting a 20% rise in same-store sales, when 12.2% gain was expected. The operator of Victoria's Secret and Bath & Body Works also raised its first quarter guidance.

Regional department store chain Stage Stores Inc. (SSI) posted a 15.1% gain in April comparable sales, when 13.8% was projected. But the company cut its first quarter and full-year view based on earlier weakness and troublesome trends that it sees. "Our first quarter sales were disadvantaged by February's storms and a disappointing Easter business," Chief Executive Andy Hall said. "While April sales benefited from the Easter calendar shift [to later in the month], rising gas prices made for a more cautious consumer."

Teen retailers enjoyed business from Easter breaks, with Hot Topic Inc. (HOTT) ending a two-year string of monthly declines by reporting an 11% jump in same-store sales and raising its full-year outlook. Zumiez Inc. (ZUMZ) also posted sales growth that exceeded analysts' expectations. The company said that while average prices rose, the amount of items bought fell, suggesting that consumers, although buying, are being cautious with their dollars. Buckle Inc.'s (BKE) same-store sales rose 14.5%, ahead of expectations for 12.5%.

There are also signs of trouble among retailers that do not report monthly same-store sales, including Sears Holdings Corp. (SHLD), which on Tuesday warned of a big first-quarter loss. Big Lots Inc. (BIG) on Thursday posted a decline in first-quarter sales, with the closeout retailer's chief executive saying business softened in the back half of the period on what it believes were "significant weather challenges."

Big Five Sporting Goods Corp. (BGFV) cited lower customer traffic when posting weak first quarter earnings and giving a very soft outlook. "We believe many of our consumers reduced purchases of discretionary items in response to the challenging economic environment, characterized by rising gas prices and high unemployment," Chief Executive Steven Miller said in a statement.

Gasoline prices are more than 30% higher than they were a year ago and the pinch is being felt. A recent Stifel, Nicolaus survey that found the number of consumers reporting that gas prices are having a "significant impact" on spending and budgeting decisions rose 12% year-over-year to 43%, the highest percentage since September 2008.

-By Karen Talley, Dow Jones Newswires; 212-416-2196; [e-mail]

--Ian Thomson contributed to this article