NEW YORK (May 7) - Consumers enticed by warmer weather and glimmers of hope for the economy bought a few more items in April, helping discounter Wal-Mart Stores and many mall clothing chains post better results for the month than expected.
Business in many areas remains weak, however, and analysts expect a slow recovery as unemployment remains high and other economic woes persist.
Among merchants that reported sales Thursday, mall-based clothing stores including Gap, American Eagle and Wet Seal posted smaller declines than analysts had forecast. The Children's Place, T.J. Maxx owner TJX Cos. Inc. and The Buckle saw bigger gains than expected.
But warehouse store operator Costco Wholesale Corp. reported a deeper-than-expected same-store sales drop, hurt by the closing of its stores on Easter.
"I think we are seeing signs of stabilization that is taking hold," said Michael Dart, senior partner at consulting firm Kurt Salmon Associates. "But this will be a long, drawn-out recovery, rather than a quick rebound" amid a litany of economic problems.
One of the biggest worries for people is job security. New claims for jobless benefits fell to the lowest level in 14 weeks, the Labor Department said — a possible signal that the wave has peaked. Still, the number of unemployed workers getting benefits hit a new record.
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Wal-Mart is continuing to take market share away from rivals as shoppers look for deals in the recession. Grocery, health and wellness products, entertainment and home furnishings were among its best-selling items.
"We gained new customers, improved our market share position, and found that when customers had more money to spend, they spent it more often at Wal-Mart," Vice Chairman Eduardo Castro-Wright said in a statement. Sales at stores open at least a year, or same-store sales, are a key indicator of retailer performance since they measure growth at existing stores rather than newly opened ones.
Wal-Mart reported a 5 percent same-store sales gain, much better than the 2.9 percent increase that analysts surveyed by Thomson Reuters had expected. That excludes fuel sales.
But Castro-Wright said the second quarter will be challenging compared with the year-ago period, when people received their government stimulus checks.
A tally by Goldman Sachs and the International Council of Shopping Centers found that same-stores sales rose 0.7 percent, the first overall increase in six months. But April benefited from a shift in the Easter holiday from mid-March last year. Michael P. Niemira, chief economist at ICSC, said because of that a better gauge was the overall March-April average, which was down 1.4 percent.
Retailers' business in April was also helped by warmer weather and tax refunds. Signs of an improving an economy — a stock market rally and better news about the housing market — have helped improve shoppers' confidence.
Sentiment levels are still hovering near historic lows, however, as shoppers worry about their jobs, available credit and their shrunken retirement funds.
Niemira cited the better tone in April's reports but cautioned that they don't prove a broadening recovery — only that inventory cuts and stores closings are starting to have an effect. He believes stores will start to see a broader recovery in late summer.
Discounter Target Corp. said same-store sales edged up 0.3 percent, not quite the 0.4 rise expected, but predicted first-quarter results will likely beat expectations. Grocery and health care products were among the best sellers. Clothing and home products were weaker.
Costco, though, said its April same-store sales dropped 8 percent, more than the 6.8 drop that analysts expected.
Among clothing and department stores, there was guarded optimism, though luxury stores still struggled with sharp sales drops. Macy's Inc. saw a 9.1 percent decline in same-stores sales, worse than forecast, but boosted its first-quarter outlook. J.C. Penney's 6.6 percent drop was a little worse than expected, but better than the company's own guidance. It also upgraded its first-quarter profit outlook.
Gap Inc. had a 4 percent decline, better than the 7.8 percent drop expected.
Among teen merchants, Wet Seal Inc. reported a 2.2 percent drop, much smaller than expected. American Eagle Outfitters Inc. had a 5 percent decline, much better than the 8.8 percent anticipated. The Buckle enjoyed an 18.2 percent gain, beating estimates, while The Children's Place had a 5 percent gain when expectations had been for sales to be flat.
