A little less gloom at the store

Wal-Mart reports a 5% increase in its same-store sales. Sales pick up for other merchants, but pockets of weakness remain.

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By Parija B. Kavilanz, CNNMoney.com senior writer

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NEW YORK (CNNMoney.com) -- Even though retailers got some much-needed relief from their sales drought in April, industry watchers cautioned against concluding that American consumers are back to shopping with a vengeance.

Monthly same-store sales did pick up for many merchants in April. Same-store sales, a key measure of a retailer's performance, are sales at stores open at least a year.

According to sales tracker Thomson Reuters, which tracks monthly same-store sales for 35 retail chains, including Wal-Mart, overall April sales for the group rose 1.2%, much better than its original forecast for a 0.2% dip in the month. The April gain was still considerably weaker than the 3.3% gain a year ago.

But given the annual shift of the Easter holiday between March and April, it's important to look at combined same-store sales results for both months to accurately assess whether or not Americans are really shopping again, said Thomson Financial's retail analyst Jharonne Martis.

And, Martis said, combined March-April same-store sales this year dipped 0.3% compared to a 1.3% gain for the same combined periods a year ago.

April sales results coincided Thursday with a new survey of 1,000 shoppers that showed consumers aren't loosening up their discretionary purchases just yet.

"This is the first time in 30 years of consumer surveys that we've seen this low interest in shopping," said Britt Beemer, CEO of America's Research Group.

The principal reason for low discretionary spending is that 48.5% of consumers feel pressure from credit card bills, the survey said.

The change in consumer behavior also has a philosophical basis, said Beemer.

The survey found that two-thirds of those surveyed feel that deficit spending in Washington will cause their children to have fewer opportunities and higher taxes.

As a result, only 30% of consumers polled said they will buy more in May.

"The retail sales declines are finding a bottom, but it's a bumpy bottom," said Frank Badillo, senior economist with retail consultancy Retail Forward, said in a note Thursday.

"The Easter shift has caused some of the turbulence the last two months," he said. "In the coming months, there will probably be more bumpiness because of the effect of last year's economic stimulus and the uncertain impact of this year's stimulus."

Wal-Mart boosting market share: Looking at where budget-conscious households are shopping, April results again revealed that discounters such as Wal-Mart (WMT, Fortune 500) continue to be winners as more consumers trade down in their everyday purchases to its value-priced products.

Wal-Mart reported much stronger-than-expected April sales, boosted by Easter-related shopping and a pick-up in purchases of entertainment and home-related products.

The world's largest retailer's same-store sales rose 5%, excluding gasoline purchases.

Analysts, on average, expected the company to post an increase of 2.8% in April, according to sales tracker Thomson Reuters.

"We gained new customers, improved our market share position and found that when customers had more money to spend, they spent it more often at Wal-Mart," Eduardo Castro-Wright, vice chairman of Wal-Mart Stores, said in a statement.

The retailer said its shoppers "responded well" to Easter seasonal offerings, resulting in high single-digit same-store sales for seasonal products compared to the Easter period last year.

Grocery, health and wellness, entertainment and home products were the best-performing categories at its stores last month.

Wal-Mart also said comparable store traffic has increased for seven consecutive months, and was higher in April than in any of the previous six months.

Besides Wal-Mart, April also provided better-than-expected results for some other merchants.

The Buckle (BKE), a seller of trendy clothing and accessories, logged an 18.2% jump in April sales, beating analysts' estimates for a 10.6% increase.

Another winner - Children's Place - reported a 5% same-store sales increase, also trouncing analysts' expectations for its sales to be flat for the month.

And sales at Gap, the No. 1 apparel seller, fell 4%, better than analysts' forecasts for a 7.9% decline.

Still weak: But despite some pickup, many retailers continued to suffer a recession-triggered sales decline in April as consumers kept a tight check on their shopping habits amid more job losses.

Among the casualties, Limited Brands (LTD, Fortune 500), owner of Victoria's Secret and Bath & Body Works chains, reported a 6% drop in its same-store sales.

Wholesale club operator Costco (COST, Fortune 500) reported an 8% same-store sales, including gasoline sales, hurt by lower pump prices. Excluding the impact of gas sales, the retailer said its same-store sales were flat versus a year ago.

Department store chain Macy's (M, Fortune 500) sales slumped 9.1% in April, worse than analysts' expectations for a 7.5% decline.

Teen merchandise seller Hot Topic (HOTT) posted a 3.1% sales gain, much softer than analysts' forecasts for a 7% increase.

"The bottom line is that I'm still a little disappointed that the average of March and April was still in the negative," said Scott Hoyt, senior director of consumer economics for Moody's Economy.com.

"That said, consumers are spending but we are nowhere near back to the norm given the pace of job losses and how low confidence is right now," he said. To top of page

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