By Anna Prior and Karen Talley
Retailers continue to be stymied by cool weather, leading to
generally lukewarm sales for April.
The group has now marked its fiscal first quarter--February,
March and April--weighed down by temperatures that kept its
warm-weather merchandise on shelves. The showing doesn't bode well
for the first-quarter results retailers will release later this
month.
"There just wasn't a reason to go to the mall because the
weather wasn't cooperating," said Barbara Kahn, director of the
Baker Retailing Center at the Wharton School. "There are also
economic matters like the payroll tax that serve as a drag," Ms.
Kahn said.
Costco Wholesale Corp. (COST) posted a 6% rise in U.S.
same-store sales minus gas, missing the 6.3% increase that was
expected. By category, food posted growth in the mid-single digit
percentage range, with the strongest results in the category coming
from candy, cooler, liquor and frozen foods. The hardware, garden,
health and beauty, and consumer electronics also recorded growth.
Regions with the strongest results included Texas, Southeast and
Midwest.
L Brands Inc. (LTD), formerly Limited Brands, reported a 2%
increase in same-store sales, below the expected 4.6% increase.
Nonetheless, the company increased its first-quarter guidance, now
expecting to report earnings of 46 cents a share, up from its prior
forecast for per-share earnings between 40 cents and 45 cents.
Of Limited's units, Victoria's Secret reported a 2% rise in
same-store sales, when a 4.4% increase was expected. "We are
disappointed with our overall performance in April, particularly in
bras," the company said in a statement. While Victoria's Secret has
seen strength in its core offerings, recent introductions haven't
offset the volume lost from discontinued styles in the past 12
months, the company said.
L Brands unit Bath & Body Works recorded a 4% increase, when
5% was expected. La Senza posted same-store sales growth of 2%,
well below expectations for 7.9% growth.
The 11 retailers tracked by Thomson Reuters are expected to show
4.9% growth in same-store sales, or sales at stores open more than
a year. This compares with 3.6% a year ago.
The cool weather not only keeps shoppers out of malls, but
stores resort to large discounts to appeal to those who do make the
trip. Aeropostale Inc. (ARO), for instance, has 50% off shorts. As
a result, fiscal first-quarter gross margins are likely to be
squeezed, unless retailers kept their inventories light. "Most
retailers had to resort to aggressive promotions in order to move
through inventory," said Adrienne Tennant, retail analyst at Janney
Capital Markets.
TJX posted an 8% rise in April same-store sales when 6.8% was
expected and narrowed their first-quarter view to 61 cents to 62
cents a share.
Fred's Inc. (FRED) posted a 1.2% rise in April same-store sales
when a 0.3% decline was expected. The showing was at the high end
of the company's expectations and came "despite the poor weather
conditions," Chief Executive Bruce Efird said.
Zumiez Inc. (ZUMZ) posted a 4.6% rise in same-store sales when
3.3% was expected. Footwear, juniors and men's showed growth, while
accessories and boys had declines, and Zumiez had its best week in
the first week of the month.
Fellow teen retailer, Buckle Inc. (BKE) reported a 6.2% increase
in same-store sales, solidly beating expectations for a 1.5%
increase. The teen retailer said average amount customers spent per
transaction rose 4% in April. The men's business saw strength in
denim and accessories and the women's business reported strength in
denim, woven tops, active apparel, dresses, accessories and
footwear.
Write to Karen Talley at karen.talley@dowjones.com
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