Comparable store sales for the US retail sector climbed 0.4% in March

Comparable store sales for the US retail sector climbed 0.4% in March

March proved to be a challenging month for the few US apparel retailers who still report their monthly sales, with many hampered by the early timing of Easter this year. And the outlook for April is mixed as cold weather is cooling demand for spring clothing collections. 

According to first figures from research firm Retail Metrics, comparable store sales for the US retail sector as a whole edged up 0.4%, marking an improvement from February's 0.1% climb. 

However, adding in the 6% decline reported by Gap Inc, which missed Retail Metrics' consensus estimate for a 5% drop, the research firm said the rise weakened to 0.2%. 

Looking ahead to April, Retail Metrics president Ken Perkins said comparable store sales should benefit from the Easter holiday shift by roughly 100-200 basis points as many retailers will have one additional selling day relative to last year.

But the weather has not helped retailers and their spring collections through the first week of April, with the Northeast and Midwest receiving early spring snow and cold temperatures. Weather forecasters are expecting a cold April that will put further pressure on specialty apparel, department store, and hardline seasonal merchandise sales, Perkins added. 

Winners and losers

All but one of the apparel retailers still reporting monthly comparable store sales posted declines in March, while the only company in positive territory reported a single-digit gain. The Buckle fared the worst with an 11.8% decline, missing Retail Metrics consensus by 570 basis points. 

Zumiez's 7.8% drop also fell short of Retail Metrics consensus estimate by 140 basis points, with the retailer blaming it on the earlier Easter holiday. March represented the retailer's tenth consecutive monthly comparable store sales decline and the eleventh in the last 12 months. It said dollars per transaction increased during the month, but this was offset by a decline in the number of transactions. 

Cato Corp also blamed its comparable store sales drop on the shift of Easter from early April last year to mid-March this year. 

For Gap Inc, March represented the company's 12th consecutive monthly comparable store sales decline, and marked a 400 basis point sequential deterioration from February. Banana Republic posted a 14% drop, Old Navy revealed a 6% fall, while Gap was down 3% year-on-year. 

The retailer entered March with excess inventory due to sluggish traffic and conversion that has plagued the company for the past year. It's namesake brand was on sale for most of the month, running 30-40% off sales with multiple email promotions sent out to customers. 

Gap said it is also entering April with surplus inventory, which it expects will pressure its first-quarter gross margin. 

However, CFO Sabrina Simmons said: "While March proved challenging, we remain focused on taking the necessary steps to improve results across the portfolio throughout the year."

Meanwhile, L Brands saw the month's strongest performance, turning in a better than expected 3% comparable store sales rise. Total company merchandise margin was down year-on-year, while inventory was up 3%. 

March sales overview

At action sportswear and footwear retailer Zumiez, comparable store sales declined 7.8% for the five weeks to 2 April. The company, which operates 662 stores, said net sales fell 2.6% to $68.8m from $70.7m in the prior year period. 

Denim specialist The Buckle saw comparable store sales, for stores open at least one year, drop 11.8%. The company, which operates 468 stores, said net sales declined 11% to $96.6m from $108.5m a year ago. 

At value-priced fashion retailer Cato, March comparable store sales edged down 1%. Net sales increased 2% to $118.8m from $117m for the company, which operates 1,371 stores.

For L Brands, owner of the Victoria's Secret, Pink and La Senza brands, net sales grew 5% to $1.03bn from $981.2m last year. Comparable store sales rose 3%, but were negatively impacted by the earlier Easter this year by around 1-2 points. 

And Gap posted a 6% drop in comparable store sales, weighed down by a double-digit decline at Banana Republic. The San Francisco-based company, which operates more than 3,300 stores, said net sales fell 6.5% to $1.43bn from $1.53bn a year ago.