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Easter helped, weather hurt retail
Holiday fueled retail spending in March but cold start to Spring slowed sales of seasonal items.
April 7, 2005: 9:32 AM EDT

NEW YORK (CNN/Money) - While sales of Easter-related merchandise helped drive retail sales last month, several chains complained that their results could have been better if early Spring weather had been a little more shopper-friendly.

Wal-Mart (Research), the world's largest retailer, was among the retailers that fared well last month, posting a 4.3 percent gain at its stores open at least a year.

In a pre-recorded sales call, the retailer said sales of its Easter items were "on plan." However, it blamed the cold and wet March weather in parts of the country for dampening sales of seasonal apparel and lawn and garden products.

Wal-Mart Stores also warned that its first-quarter earnings would come in at the low end of its previous guidance, citing concerns that April sales will be weak due to an early Easter.

It now estimates earnings will come in around the low end of its previous estimate of 56 to 58 cents a share. Analysts surveyed by earnings and sales tracker First Call have a consensus EPS forecast of 57 cents. The retailer earned 50 cents a share for the same period last year.

For April, the retailer expects same-store sales to be between flat to up 2 percent and guided same-store sales for the quarter to be up at the low-end of its previous guidance of 3 to 5 percent.

Wal-Mart's rival Target Corp. (Research), had better news to report. The second largest discounter after Wal-Mart posted March same-store sales up 8.2 percent, beating analysts' consensus estimate for a 7.6 percent sales increase.

In a statement, Target CEO Bob Ulrich said the company's better-than-expected sales performance in February and March "gives us confidence that we will meet or exceed our first-quarter profit plan." Analysts expect the retailer to post a first-quarter profit of 53 cents a share.

"I think the real story last month was that in spite of higher interest rates, exploding energy costs and debt levels, the American consumer rolls on," said Howard Davidowitz, president of Davidowitz & Associates, a New York-based retail consultancy and investment banking firm.

Ken Perkins, analyst with RetailMetrics, agreed.

"The tough head winds are definitely there but March was still a decent month," Perkins said. At the same time, Perkins said March sales trends typically set the tone for how the spring season fares overall.

"If retailers were forced to push off sales of seasonal merchandise into April and beyond, that could be troubling cause it will cut into their margins," he said.

The teen clothiers and luxury sellers continued their winning streak in March. In the first category, both American Eagle Outfitters (Research) and Bebe Stores (Research) posted blowout sales numbers. Sales at American Eagle jumped 29.2 percent while sales at Bebe spiked 30.6 percent.

Meanwhile, high-end seller Nordstrom (Research) logged a 5.5 percent increase in comparable sales last month.

Limited Brands (Research), parent of Victoria's Secret, Bath & Body Works, and Express chains had a disappointing month, posting a same-store sales decline of 7 percent, worse than the 2.2 percent decline forecast by Wall Street.

In the department store arena, J.C. Penney (Research) said March same-store sales rose slightly, up 0.1 percent. The retailer said strength in the southeast and western regions of the country was offset by weakness in the midwest and northeast during the Easter selling season.

Penney reiterated its first-quarter earnings guidance to be between 48 to 53 cents a share.

May Department stores, operator of such stores as Lord&Taylor, Filene's, Foley's fared worse. The company, which recently agreed to be acquired by Federated Department Stores (Research), said its same-store sales decreased 10.8 percent last month.  Top of page

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