Retailers post biggest April sales decline
Weather, gas and housing hurt. The spending outlook dimmed.
U.S. retailers posted the biggest monthly sales decline ever in April, trailing estimates that already were reduced as cold weather curbed sales of lightweight clothing.
Rising gasoline prices and a slumping housing market also took a toll - and, analysts cautioned, dimmed the outlook for consumer spending in the coming months.
The April sales figures were released yesterday by major retail chains across the country. Retailers based in the Philadelphia area generally said their results also were down from April 2006.
A record 80 percent of retailers nationally missed analysts' sales estimates in April, according to Retail Metrics Inc., a Swampscott, Mass., research firm.
Wal-Mart Stores Inc. recorded a rare decline in sales. April results were the firm's weakest since it started publishing monthly sales in 1980, said John Simley, a company spokesman. Its sales at stores open at least a year - a key industry measure - fell 3.5 percent from April a year ago.
But the month's disappointments crossed all segments of the industry and included Abercrombie & Fitch Co., Federated Department Stores Inc. - the parent of Macy's and Bloomingdale's - and J.C. Penney Co. Inc.
"Consumers are feeling pressured by higher gasoline prices and a sluggish housing market, particularly low- and middle-income consumers," said Ken Perkins, president of Retail Metrics.
But there also were two unusual factors: Temperatures averaged 5 degrees below normal in the Northeast, cutting into sales of shorts and other spring apparel; and Easter was eight days earlier than in 2006, shifting purchases for the season into March. That tempered the outlook, according to some analysts.
"April sales results were a distortion," said Steven Baumgarten, an analyst at PNC Wealth Management in Philadelphia. "A lot of retailers planned for the weak April."
Even so, sales were much softer than expected, raising concerns that retailers also will see disappointing results in the months ahead.
The UBS-International Council of Shopping Centers sales tally of 53 stores posted a decline of 2.4 percent in April, the biggest drop since the index started tracking the data in 1970. The tally is based on same-store sales.
Michael P. Niemira, chief economist at the council, called the drop in same-store sales a rarity, noting that it was only the third decline in the overall index since 1970.
While analysts will be closely watching how May fares, since the month will provide a better indication of consumers' health, concerns are rising that shoppers can no longer bear the weight of the economy's woes.
"The slowdown is at hand," Niemira said.
Wal-Mart warned last month that it expected same-store sales in April to be anywhere from unchanged to down 2 percent, but business was much weaker because of disappointing apparel and home-goods sales at its Wal-Mart discount chain. Same-store sales at the discount stores were down 4.6 percent, but sales rose 2.5 percent at the Sam's Club warehouse-club division.
Wal-Mart said the slowing economy was a big factor in its sluggish performance.
Target Corp. reported a 6.1 percent decline in same-store sales, in line with the 6.2 percent estimate. Target blamed the drop-off on a sales shortfall during the first two weeks of the month and an earlier Easter holiday. However, the company said it remained on track to meet its earnings goals for the year.
Costco Wholesale Corp. had a 7 percent gain in same-store sales, better than the 6.3 percent estimate.
Federated posted a 2.2 percent decline in same-store sales, while analysts had forecast a 1.7 percent gain.
Penneys said its same-store sales fell 4.7 percent in its department-store business, more than the 0.8 percent analysts expected.