US retailers shrugged off chilly weather in March

US retailers shrugged off chilly weather in March

US retailers weathered all manner of obstacles - including chilly weather, the late Easter holiday and higher fuel prices - to top downbeat March forecasts, according to results posted yesterday (7 April), as shoppers continued to head to the stores to spend.

"Sustained growth in jobs and income may be helping to alleviate some of the pain," says said Frank Badillo, senior economist at Kantar Retail. 
"What's encouraging is that the Easter-related letup in sales wasn't as severe as expected by a number of retailers - especially in light of the additional drag of higher fuel prices."

Easter falls on 24 April this year, three weeks later than last year's 4 April.
According to Kantar Retail, same-store sales were up 2.5% in March. But while any gains are good, the consultancy and research firm points out this momentum is slower than the 4.4% rise booked last month and 9.2% in March last year. The month's tally was also less than half of last year's combined 5.7% gain for March and April.

"Most retail sectors continued to record solid growth year-over-year," agrees Michael McNamara, vice president, research and analysis for MasterCard Advisors SpendingPulse, which follows retail sales across all payment forms.

Industry observers are also keeping a close eye on gasoline prices, which are now above $3.50 a gallon.

"Compared to March 2010, we're seeing drivers pump less gasoline," McNamara says. "Based on what we've observed in the last three to four years, high gasoline prices typically result in consumers consolidating shopping trips, shopping closer to home, and making fewer trips to the brick and mortar locations."

That said, e-commerce sales seem to have benefited from this trend - with online apparel sales up by 18.7%, making this the 16th straight double-digit increase.

For the apparel segment as a whole, year-on-year retail sales were up by 4.4% - the eighth consecutive month of gains. Children's wear stayed above 10%, while the women's category was in the 6-7% range. The only sub-sector posting a loss was footwear, with sales declining 1.6%.

Notable results in the month included Nordstrom, JC Penney, Kohl's, Macy's, Saks, Limited Brands, Buckle, Zumiez and Wet Seal. But the biggest disappointment was again Gap Inc, which blamed a 10% drop in March same-store sales on the negative impact of the Japanese earthquake.

Moving further into the year, higher fuel prices are likely to have an ongoing impact on shoppers, particularly those in the lower-income bracket, leaving them with less disposable income for other retail sectors. But this will be offset if households see a continuing pick-up in income and job gains in the months ahead.

The industry is also bracing itself for the impact of rising cotton, transport and labour costs. 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.

One likely benefit to factor in, though, is that the shift of Easter to late April this year is expected to lead to higher same-store sales this month as shoppers begin to stock up on summer clothes.

According to the National Retail Federation, this year's Easter is the latest since 1943 and shoppers are forecast to spend $21.51 on new apparel, up from last year's $19.03. Total spending on apparel this Easter should reach $2.4bn, its '2011 Consumer Intentions and Actions' survey found.