Blog: Leonie BarrieMarch sales exceed expectations

Leonie Barrie | 14 April 2009

US retail sales in March offered a glimmer of hope to a beleaguered sector, with same-store sales posted by many chains exceeding earlier, gloomy expectations.

While shoppers are still cautious, there are signs that they are starting to spend again. JC Penney, Kohls and Target all came in ahead of expectations. Gap said it has stalled its sales slump. And teen fashion retailers Hot Topic, American Eagle, Aeropostale and Gymboree even raised their first quarter earnings guidance.

But luxury retailers continued to struggle, and Wal-Mart – usually one of the sector’s most solid performers – saw its same-store sales rise less than expected.

Industry observers warn against reading too much into the results, and say pent-up demand is unlikely to be sustained. But the results were achieved despite the late timing of Easter this year, which is also likely to provide another sales boost next month.

Elsewhere, other retailers are bucking sales trends too. In the UK, JD Sports Fashions posted a 9% rise in full-year pre-tax profit to GBP38.2m (US$56.1m), as sales jumped 13%. Growth was driven by its fashion fascias – and early signs suggest this trend is continuing into the company’s new financial year.

And in Japan, Fast Retailing posted a 24% jump in first-half profit and said it plans to take the Asian retail market by storm. The company, which owns the Uniqlo casual clothing chain, intends to double its stores in Asia this year to mirror the dominance that H&M and Zara have in Europe.

Brands and retailers also remain upbeat about the growth prospects of ethical and organic clothing, despite the current downturn. Sales of ethical clothing have more than quadrupled in the last five years as British shoppers seek out fair-trade products, one new report says. While another survey says UK demand for organic clothing and textiles will slow during 2009 and 2010 – but should pick up again in two years' time.

A "significant decline" in first quarter sales, however, has forced Danish footwear maker Ecco to lay off 1,150 people - around 10% of its production workforce. The jobs are to go at four company-owned factories which make Ecco branded shoes in Slovakia, China, Thailand and Indonesia.

 


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