By Anne D'Innocenzio
Associated Press
NEW YORK -- Higher prices for gasoline and food are cutting into consumers' spending on clothes and other non-necessities in April, slowing a three-month shopping spree and giving the nation's retailers a modest sales performance.
It was also clear as merchants reported their sales figures Thursday that cooler weather hurt business. Companies across most sectors, even industry leader Wal-Mart Stores Inc., posted disappointing results.
"I feel (the price hikes) are already hitting the low-end customer," said Ken Perkins, research analyst at Thomson First Call. He added that eight out of 10 discounters missed earnings expectations in April.
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Perkins added that these consumers still haven't benefited from the economic recovery, and are still worried about their jobs.
Michael P. Niemira, chief economist at The International Council of Shopping Centers, said, "It was winterlike weather in the Northeast, but there were other factors too."
Niemira's sales tally for 72 retailers was up 4.4 percent, below the 5 percent gain that he had expected. The International Council of Shopping Centers-UBS tally is based on what the industry calls same-store sales, or sales at stores open at least a year; they are considered the best indicator of a retailer's health.
C. Britt Beemer, chairman of America's Research Group, based in Charleston, S.C., said a recent survey showed that anywhere from 8 percent to 11 percent of 1,000 consumers polled were changing the way they shop, including reducing their spending and looking more for coupons, because of the increased prices.
But at least one observer -- Frank Badillo, senior retail economist at Retail Forward, a consulting firm in Columbus, Ohio -- disagreed, believing that "consumers have put up" with the price increases. But if they continue over the next few months, stores will start feeling the impact as consumers shift their spending.
A fairly early Easter prompted many consumers to do their shopping in March, depressing last month's business by about 1.5 percentage points, Niemira estimated. But he and other analysts also believe retailers, particularly discounters, are starting to see the effects of higher gasoline and food prices.
Niemira believes that if stores maintain a 4.4 percent pace for the rest of the year, 2004 will end up having the best performance since 1999, when it generated a 6.7 percent gain. There was also another positive for some retailers -- Gap Inc., Talbots Inc., and TJX Cos. raised their first-quarter profit outlooks, noting that consumers were buying at full price rather than waiting for markdowns.
Wal-Mart announced a gain of 4.4 percent in April, slightly below the 4.5 percent estimate of Wall Street analysts surveyed by Thomson First Call.
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Target Corp., dragged down by its Mervyn's clothing division, had a disappointing 4.9 percent gain in same-store sales in April. That was below the 5.4 percent Wall Street anticipated.
Costco Wholesale Corp. reported a 10 percent increase in same-store sales, a bit above the 9.8 percent Wall Street estimate.
Department stores, which have been showing signs of improvement lately, had mixed results.
High-end retailers Neiman Marcus Group and Nordstrom Inc. again posted strong sales -- Neiman Marcus's same-store sales increased 14 percent, while analysts expected 14.7 percent. At Nordstrom, same-store sales rose 10 percent, higher than the 9.1 percent Wall Street estimate.
J.C. Penney Co. Inc. reported same-store sales at its department store business was up 5.3 percent, higher than the 5 percent forecast.
And Federated Department Stores Inc. reported a 5.4 percent increase in same-store sales, above the 5 percent Wall Street projected.
