Americans spent briskly during the early spring months in the latest sign that they're encouraged by the economic recovery.
Americans spent briskly during the early spring months in the latest sign that they’re encouraged by the economic recovery.
Falling gas prices, a rallying stock market and gains in the job market all fueled Americans’ shopping habits even as cold weather tempered their desire to buy spring fashions.
Revenue at stores open at least a year – an industry measure of a store’s health because it excludes results from stores recently opened and closed – rose 4.9 percent in April compared with the same month a year ago, according to a preliminary tally of 12 retailers by the International Council of Shopping Centers trade group.
That continues a trend that Americans started in early spring. In March, revenue rose 2.2 percent. And for the combined months of March and April, the figure rose 3.6 percent.
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“April turned out to be decent despite adverse weather conditions,” said Michael P. Niemira, chief economist at the ICSC.
While big chains such as Wal-Mart Stores Inc., Target Corp and Macy’s Inc. don’t report monthly revenue, the stores that do offer economists a snapshot of consumer spending habits. In total, the retailers that report monthly data represent about 6 percent of the $2.4 trillion in U.S. retail industry sales.
Among the big winners for April were Ross Stores Inc. and TJX Cos., which operates TJ Maxx and Marshalls stores. Both companies benefited from Americans’ desire to buy brand-name fashions at discounted prices.
Ross said on Thursday that revenue at stores open at least a year rose 7 percent during April, helped by consumer demand for its low-price clothing and accessories. That’s above Wall Street estimates: Analysts expected a 5.8 percent increase in April, according to a Thomson Reuters poll.
TJX said that revenue at stores opened at least a year climbed 8 percent in April on strong customer traffic. That also tops the 6.8 percent increase that analysts polled by Thomson Reuters expected.
“Consumers responded to our extremely fresh selections of branded spring apparel,” said Carol Meyrowitz, CEO of TJX, in a statement.
Gap Inc., which reported after the regular markets closed Thursday, announced that the figure rose 7 percent, fueled by strong results at its namesake Gap and Old Navy chains.
The results beat Wall Street’s estimate for a 5.5 percent increase, and the company offered better-than-expected first-quarter guidance.
But a few retailers posted gains that missed Wall Street estimates.
Costco Wholesale Corp., which accounts for about two-thirds of the retail sales tally, reported that revenue at stores open at least a year climbed 4 percent in April. That’s below the 4.5 percent increase analysts polled by Thomson Reuters expected the warehouse club-operator to report.
Limited posted a 2 percent increase in revenue at stores opened at least a year. Revenue was hurt by the shift of some spring-break business into March due to an early Easter. That’s below the increase of 4.6 percent that Wall Street had expected. But the operator of Victoria’s Secret, Pink, and Bath and Body Works raised its guidance in the first quarter.
Even though retailers several retailers posted solid gains during April, the month’s results could have been better if it weren’t for Mother Nature. Exceptionally cool temperatures lingered in April, which was the coldest in five years, according to weather research firm Planalytics Inc.
As a result, Ken Perkins, president of RetailMetrics, a research firm, said that some stores offered aggressive discounts to get rid of excess inventory of spring merchandise. While the discounting may have boosted revenue, it could hurt stores’ first-quarter profits.
“When you are looking at 40 degree temperatures, no one wants to buy bathing suits and T-shirts,” Perkins said. “There was definitely widespread discounting as the month progressed.”
In fact, Ann Inc., which operates Ann Taylor and Ann Taylor Loft women’s clothing stores, does not report month revenue data, but on Thursday it lowered its first-quarter revenue guidance. The chain said cold weather dampened sales and led to more markdowns than planned.