Teens and bargain hunters propelled retail sales in April, but couldn’t save the industry from the dampening effects of chilly weather and continuing economic worries.
A monthly measure of same-store sales rose 3.7% last month, according to Thomson Reuters. Retailers performed better than they did in March, when the gauge rose 1.1%, and also beat the 0.8% uptick in April 2012.
But Wall Street was nonplussed, having predicted a 4.3% gain. Drug stores were especially weak; with the sector removed from the overall tally, retail sales got a 4.8% boost.
Retailers calculate same-store sales, which only consider revenue at locations open at least a year, in an effort to strip out volatility.
But analysts are increasingly skeptical of retail sales roundups, which a few years ago included data from several dozen reporting companies but in April only featured numbers from 13. Major chains such as Wal-Mart Stores, Macy’s Inc. and Target Corp. have abandoned their monthly reports in favor of quarterly announcements.
When T.J. Maxx parent TJX Cos. and Ross Stores Inc. follow suit next month, the retail sales overview will become more of a sampling with 11 reporting chains.
Analyst Ken Perkins, who releases a separate retail sales summary via Retail Metrics Inc., said the gauge was up 2.8% on forecasts of a 3.5% surge. He pointed to inclement weather, sequestration concerns and anemic economic data as the primary culprits.
But the missed expectations were especially concerning given that retailers had an extra Sunday selling day in April, with the Easter holiday shift happening earlier this year in March.
Still, there were bright spots. The teen apparel category was pegged to enjoy a 2.2% increase in sales; instead, it boomed 5.6% as retailers such as the Buckle and Zumiez handily beat estimates.
Discount chains such as TJX and Ross, reporting growth of 8% and 7% respectively, also showed strength due to their “compelling assortments of branded apparel and home fashions offered at discounted prices,” according to a report from RBC Capital Markets analyst Howard Tubin.
A major miss: L Brands Inc., which was expected to enjoy a 4.6% upswing but instead reported a 2% climb. Tubin said weak bra sales at the company’s Victoria’s Secret label were partly to blame, as “most recent product introductions have not been able to offset volume lost from exited styles.”
Thursday morning’s results are not final. Gap Inc. will release its numbers later in the day.
May has the potential to improve on April’s mixed situation, Perkins said.
Though a Gallup poll today showed that 60% of Americans say they enjoy saving money compared to the 37% who say they’d rather spend it – a widening chasm – the improving weather and promising economic signals may compel more shopping.
The Labor Department said Thursday that unemployment benefit claims fell more than expected to 323,000 filings last week. Stocks are at record highs and the housing market seems to be recovering, Perkins said.