Most retailers post weak sales
From news services
NEW YORK — The nation’s retailers reported the weakest March sales in 13 years today as consumers — fretting about mounting economic problems and enduring a frigid Easter — limited their shopping to food and other essentials.
With prices at the pump rising and worries about jobs increasing, shoppers bought basics at discounters and wholesale clubs and snubbed mall-based chains’ clothing, jewelry and furniture. The earliest Easter in 95 years also hurt sales; shoppers weren’t in the mood to buy spring clothing in cold weather.
Wal-Mart Stores Inc. and Costco Wholesale Corp. were among the best performers. Wal-Mart raised its earnings outlook, noting that better inventory control helped to limit markdowns on merchandise.
But March proved to be another weak month for many others, including J.C. Penney Co., Gap Inc., and Limited Brands Inc. All of them reported sharp drops in sales.
"Discounters are going to continue to do well in this economy," said Ken Perkins, president of RetailMetrics LLC, a research company in Swampscott, Mass. "Anything that is discretionary is going to continue to be under pressure."
According to a preliminary tally by UBS-International Council of Shopping Centers, sales slid 0.5 percent versus its original estimate of 1 percent growth. The results, based on same-store sales or sales at stores opened at least a year, were the weakest since March 1995, when the industry registered a decline of 0.8 percent .
The retail industry already had been bracing for a weak March because Easter landed two weeks earlier than last year, on March 23 when winter weather still gripped most of the country.
A deteriorating economy, soaring food and gas prices, limited credit and slumping home prices shook shoppers further. The Conference Board, a business-backed group, said late last month that consumers’ outlook for the economy was the gloomiest in 35 years.
At the pump, the national average price of a gallon of gas rose 1.4 cents overnight to a record $3.357 a gallon, according to AAA and the Oil Price Information Service. Prices have set a string of records in recent weeks, and are 56 cents higher than a year ago.
With the peak summer driving season still to come and crude oil prices rising too, gas may reach the retail price of $4 a gallon that the Energy Department has been forecasting.
A sluggish job market is adding to worries. On Thursday, the Labor Department said that applications for jobless benefits totaled 357,000 last week, down by 53,000 from the previous week. Even with the improvement, the four-week average for claims rose by 2,500 to 378,250, the highest level since early October 2005.
While many economists believe that the country is in a recession, the Bush administration says that growth should revive this summer when 130 million households start spending their economic stimulus checks. Janet Hoffman, managing partner of the North American retail division of Accenture, and other analysts believe that any sales lift at stores will only be temporary, however.And many believe that shoppers will use a chunk of the money to pay down debt.
In this challenging economy, "consumers are looking for value and are willing to trade down," said Hoffman.
Wal-Mart Stores reported a 0.7 percent gain in same-store sales. That was slightly below the 1.0 percent estimate by analysts surveyed by Thomson Financial.
The nation’s largest retailer said that food and consumables, and electronics such as video games and digital cameras sold well. But cold weather hurt apparel, except for basics like T-shirts. Home furnishings continued to be weak.
Wal-Mart raised its first-quarter earnings outlook because better inventory controls yielded fewer markdowns and reduced store theft.
Rival Target Corp., which has been stumbling lately, posted a 4.4 percent decline in same-store sales. Analysts had expected a 2.7 percent decrease.
Costco posted a 7 percent gain in sales. Analysts had expected a 5.9 percent gain.
But many department stores and apparel chains suffered.
Among department stores, J.C. Penney posted a larger-than-expected 12.3 percent sales decline. The department store retailer had warned late last month that same-store sales would be down at least 10 percent amid a souring economy.
Even high-end department stores like Saks Inc. which operates Saks Fifth Avenue, and Nordstrom Inc. languished. Saks reported a 2.9 percent decline in same-store sales, worse than the 3.5 percent gain that Wall Street anticipated. Among the weakest areas at Saks were women’s designer apparel and fine jewelry. Nordstrom had a 9.1 percent decline in same-store sales; analysts had expected an 8.0 percent drop.
Limited Brands reported an 8 percent drop in sales, larger than the 7.2 percent decline that analysts had expected. Gap reported an 18 percent drop in same-store sales; analysts had expected a 7.7 percent decline. At the company’s Old Navy division, same-store sales were down 27 percent.