This years late Easter helped drive more shoppers into stores

This year's late Easter helped drive more shoppers into stores

US retailers' April sales were lifted by this year's late Easter which shifted holiday selling into the month and provided a much-needed boost to revenues, but worries continue to persist over the impact of higher fuel prices.

It was widely expected that the calendar shift, which saw Easter fall three weeks later this year, would help drive more shoppers into stores. And spend they did, maintaining the momentum that has been building since the back-to-school selling season last year.

According to Kantar Retail, average retail sales at stores open at least a year rose 8.7% in April - beating the 2.5% same-store sales gain last month and the 1.2% gain in April 2010.

One way to offset the shifting holiday and provide a truer comparison of overall consumer spending is to combine results for March and April. And even looking at the sales gains this way showed they held nearly steady as concerns over rising prices appeared to be cushioned by strong job gains in February and March, Kantar Retail said.

For the two-month period, same-store sales rose 5.4% compared with last year's 5.7% gain. 

"The shift in the Easter holiday between this year and last may have helped some of the comparisons," agrees Michael McNamara, vice president, research and analysis for MasterCard Advisors SpendingPulse, which follows retail sales across all payment forms.

But he also points out that "unusually stormy weather in the South and Midwest may have cut down on shopping trips."

SpendingPulse figures suggest apparel firms were among the winners. Total apparel sales at US retailers recorded their ninth consecutive year-over-year gain, rising a notable 10.4% in April.

Significantly, this momentum was played out across all apparel sub-sectors. Family apparel came in at 10.6%, posting the 11th straight positive year-over-year growth rate. Men's wear weighed in at 12.4%, showing six straight months of positive growth.

Women's wear, up 7.4%, posted its seventh straight month of growth and the sub-category's highest year-over-year growth rate since May 2007. And at 6.3%, Footwear also made a comeback into positive territory, following a brief dip in March.

Wet Seal, Men's Wearhouse, Cato Corp, Limited Brands and Ross Stores upgraded their earnings outlooks, while teen chains Hot Topic, Zumiez and Buckle also beat estimates. But the likes of Stage Stores, Gap Inc and Aeropostale warned their profits would come in below expectations.

Despite the generally upbeat results, worries continue to persist about the impact of higher gas prices - which are currently higher than $4 a gallon - on consumers' spending power.

Andy Hall, president and CEO of regional department store retailer Stage Stores, noted that "rising gas prices made for a more cautious consumer." He also said the firm's first quarter had been hurt by "aggressive promotions."

"The impact of rising fuel prices will become more obvious in the months ahead, but just how obvious depends on how much job and income gains also suffer under the weight of rising fuel prices and economic uncertainty," explains Frank Badillo, senior economist at Kantar Retail. 

Likewise, SpendingPulse's McNamara believes the continued rise in gasoline prices "can have a variety of repercussions for retail."

This includes consumers making "fewer shopping trips, especially on weekends, and this may contribute to an ever stronger growth for e-commerce." Low-income shoppers in particular are most likely to rein in their spending.

Along with rising gasoline prices, there are concerns as to whether consumers' spending power can be sustained in the face of headwinds that include higher food costs in the second half of the year.

The industry is also bracing itself for the impact of rising cotton, transport and labour costs on apparel prices. And the worry is that retailers will have to lift prices at a time when consumers have less 'extra' money or discretionary funds to spend.

That said, there are hopes that the return of warmer, seasonal weather will help drive sales of summer merchandise in the next couple of months - with those stores offering products that are good value and on trend most likely to emerge as the winners.