Retail sales: Cash registers ring in April
Merchants post strong sales as Easter holiday shift and warmer weather helped offset gas price worries. All bets off in May?
By Parija Bhatnagar, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) - U.S. retail chain stores delivered some strong sales numbers last month, helped largely by a shift in the holiday calendar which delayed the impact of Easter shopping figures by a month into April and the onset of warmer weather which fueled buying of summer merchandise.

Among the results reported early Thursday, Wal-Mart (Research)'s sales at its stores open at least a year - a key retail measure known as same-store sales - rose 6.8 percent in April, in line with its previous guidance and up substantially from its 1.4 percent sales gain in March.

The world's largest retailer said net sales for the four-week period ended April 28 rose 16 percent to $25.8 billion from $22.4 billion a year ago.

In a statement, Wal-Mart's chief financial officer Tom Schoewe said a late Easter helped to spur sales of toys, electronics, video games, music and candy.

Moreover, Schoewe said the negative impact of rising fuel costs were "overshadowed by the customers' response to merchandise in apparel for the entire family and consumables."

For May, the retailer expects sales to increase from two to four percent.

The recent upswing in prices at the pump had some industry watchers worried that it could result in a pullback in consumer spending particularly among low-income consumers who typically take the biggest hit to the wallet whenever gas prices rise.

In turn, this hurts sales at retailers like Wal-Mart, Target and other extreme-value merchants who cater primarily to this demographic.

Any long-term pullback in consumer spending doesn't bode well for the broader economy since consumer purchases fuel two-thirds of the economy.

However, observers said strong numbers in April helped allay those fears, for now.

"The consumer clearly shrugged off and gas prices were not a factor at all in April," said Ken Perkins, research analyst with Retail Metrics, although he cautioned that gas prices could dent May and June sales.

"The economy is still going strong. By and large the jobs numbers still look good and that should help consumers to keep spending," he said. "Any deterioration there will be a cause for concern."

But Marshal Cohen, chief industry analyst with market research firm NPD Group, said people shouldn't be fooled by last month's sales momentum.

"Gas prices really didn't weigh on consumers' minds until the last two weeks of April when prices got over $3 a gallon," Cohen said. "If I ask people today what they think about gas prices, their answer will be significantly different. Today gas prices are on the very top of everyone's minds."

"April was the test of whether there's still exciting merchandise out in stores. May will be the test for gas prices. We already have the answer to one but not the other," Cohen said.

Other winners in April included wholesale club operator Costco (Research), which posted a seven percent sales increase, boosted by food and gasoline sales.

Limited Brands, (Research) owner of the Victoria's Secret and Bath & Body Works chains, logged a robust nine percent gain in its sales, while women's apparel chain Chico's (Research) posted a 5.4 percent jump in sales last month.

However, beleaguered home furnishings chain Pier 1 Imports (Research) fell deeper into a hole after posting an 11.4 percent in sales last month. Further, the company also warned of a wider-than-expected loss in the first quarter of between 24 cents and 28 cents a share.

Analysts had forecast a loss of 11 cents a share for the period, according to First Call.

In a statement, the company said it has hired JP Morgan to evaluate "strategic alternatives" such as the potential sales of its credit card business and possible sale of other assets.

Other laggards included apparel seller Gap (Research), which posted a three percent sales decline and teen clothier Hot Topic (Research) which logged a 6.5 percent drop in sales last month.

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.