Cold March keeps shoppers’ spending tepid
NEW YORK (AP) — So much for new spring shorts and T-shirts. As cold weather lingered across most of the country, Americans shopped modestly in March.
U.S. retailers reported a key revenue figure rose slightly during the month, as shoppers held back on spending because of the cold weather across the nation, particularly the Midwest and East Coast, and continued fears about the economy. Economists monitor consumer spending because it accounts for more than 70 percent of economic activity.
According to a preliminary tally of 15 retailers by the International Council of Shopping Centers, revenue in stores open at least a year rose 1.4 percent, or 2.2 percent excluding drugstores. That was below expectations, said Michael Niemira, chief economist at the ICSC.
Revenue in stores open at least one year is a key measure of a retailer’s financial health, because it excludes stores that open or close during the year.
Weather was a factor, with March being the coldest in seven years. The comparison with last March was especially tough. Last year saw the warmest March on record, according to weather research firm Planalytics Inc.
“Wintry weather conditions persisted deep into March, depressing spring apparel, home and garden, and seasonal merchandise sales,” said Ken Perkins, president of Retail Metrics. Meanwhile, the payroll tax increase that took effect in January and the uncertain economy have weighed on spending, he said.
Analysts often like to combine March and April to get a clearer picture of shoppers’ habits, because of volatile weather patterns that time of year and Easter’s movement around the calendar.
Easter tends to help stores that sell groceries and candy but costs clothing sellers a day of sales without spurring much additional spending. Most of the stores that report monthly sales figures are clothing specialists.
Job fears have risen since the government reported hiring was the slowest in nine months in March. However, the Labor Department reported Thursday that the number of Americans seeking unemployment benefits fell sharply last week, a hopeful sign that the slowdown in hiring may have been temporary.
Perkins expects April to be stronger, as the weather improves and customers respond to strong fashion trends such as colorful jeans and prints. An earlier Easter, which meant one less selling day in March if stores are closed or have a low-sales day if they stay open, will also help April results, he said. In addition, shoppers should benefit from tax refunds and falling gas prices.
The number of retailers reporting monthly sales figures has been shrinking. Big names like Target, Macy’s and Nordstrom have recently stopped reporting. Wal-Mart, the world’s largest retailer, hasn’t reported monthly sales figures in several years.
With the shrinking list, Costco, which posted a 6 percent gain in February, now accounts for about two-thirds of the revenue in the tally. In total, the retailers that report monthly data represent about 6 percent of the $2.4 trillion in U.S. retail industry sales.
“It’s kind of like Ryan Gosling’s SAT scores, these numbers don’t mean anything,” said Judith Russell, an analyst with The Robin Report, a retail industry strategy newsletter. A clearer picture of retail sales will emerge when the government reports retail sales figures on Friday. The cold weather dampened sales, she said, but overall she remains positive about fashion trends, with bright colors and prints becoming popular as cotton prices ease.
Retailers who do report had a mixed month, with those with more stores on the East Coast, where the weather was cold and wet, faring worse than those with stores concentrated on the West Coast.
TJX Cos., which operates TJX and Home Goods stores, said revenue in stores open at least a year fell 2 percent, while analysts expected a 1 percent drop. The company said that the drop was due to the weather and the Easter shift, and they expect a stronger April.
“Overall business trends improved as the weather became warmer,” CEO Carol Meyrowitz said. “April is off to a good start, our inventories are in great shape, and we are seeing an enormous amount of desirable product in the marketplace.”
L Brands, formerly Limited Brands Inc., the parent of Victoria’s Secret and Bath and Body Works, said the revenue figure was flat, above analyst expectations for a drop, according to Thomson Reuters.
Warehouse club operator Costco Wholesale Corp.’s revenue figure rose 4 percent in March, short of expectations for a 5.2 percent rise.
Department store operator Stein Mart Inc. said revenue at stores open at least a year dropped 2.8 percent in March, falling short of Wall Street predictions. The company said sales were hurt by cold weather and the earlier Easter.
“This year, more than ever, it will be important to combine March and April sales results to get a true picture of our spring selling season due to this year’s Easter calendar shift,” said CEO Jay Stein.
Gap Inc. said the measure fell 1 percent, a smaller drop than the 2.1 percent analysts expected. The company said the earlier Easter hurt results, particularly at Old Navy. The measure was flat at Gap stores, up 1 percent at Banana Republic and down 2 percent at Old Navy.
In terms of teen retailers, the Buckle Inc. said the revenue figure was flat, while analyst expected a 0.3 percent decline.