April 5 (Bloomberg) -- Gap Inc. and Target Corp. reported March same-store sales that topped analysts’ estimates as unseasonably warm weather and an earlier Easter holiday boosted purchases of spring merchandise.
Sales at Gap, the largest U.S. apparel chain, climbed 8 percent, beating the average projection for a 4.6 percent gain from analysts surveyed by researcher Retail Metrics Inc. Target, the second-largest U.S. discount chain, posted a 7.3 percent increase in same-store sales, topping the 5.7 percent estimate.
Retailers are benefiting from warm weather that boosted demand for spring products and accelerated Easter shopping as the holiday moved more than two weeks earlier this year. Last month was the warmest March for North America in more than 50 years, according to Planalytics, a weather data provider.
“It puts people in the frame of mind to buy the product,” Dorothy Lakner, an analyst at Caris & Co. in New York, said in a telephone interview. “The other important thing to keep in mind is just the fashion trends -- the color is really appealing to people.”
Same-store sales for the more than 20 companies tracked by Swampscott, Massachusetts-based Retail Metrics rose 3.9 percent, beating the average estimate for a 3.3 percent gain. Sales have topped estimates for four straight months.
Gap, based in San Francisco, fell 0.8 percent to $26.45 at the close in New York. Minneapolis-based Target fell 0.2 percent to $57.72. The Standard & Poor’s 500 Retailing Index gained 0.7 percent, compared with a 0.1 percent decline for the S&P 500.
Easter spending is expected to rise to $145.28 per person this year, an 11 percent increase from last year, according to a March 20 report from the National Retail Federation. Total spending will be about $16.8 billion, including $3 billion in apparel purchases, the Washington-based NRF said.
TJX Cos., operator of T.J. Maxx discount stores, reported same-store sales that rose 10 percent, topping the 4.8 percent average estimate. The company also boosted its first-quarter earnings forecast to as much as 52 cents a share from as much as 47 cents. The shares gained 2.4 percent to $40.29.
Macy’s Inc.’s comparable-store sales rose 7.3 percent last month, beating estimates for a 4.8 percent increase. The gain led the owner of Bloomingdale’s and namesake stores to boost its forecast for March and April same-store sales to an increase of 4.3 percent to 4.5 percent, from 3 percent to 3.5 percent.
The sales “exceeded our expectations beyond the benefits we anticipated from an earlier Easter and a shift in a cosmetics event from April last year to March this year,” Macy’s Chief Executive Officer Terry Lundgren said in a statement. “The early warm weather drew attention to our outstanding assortments of fresh spring goods, which were received enthusiastically by customers.”
The Cincinnati-based company’s shares fell 0.1 percent to $40.87.
Limited Brands Inc., the Columbus, Ohio-based operator of the Victoria’s Secret lingerie chain, posted an 8 percent increase in same-store sales, topping the 4.6 percent estimate.
Gap’s March same-store sales gain was the company’s biggest since April 2011 and follows a 10 percent decrease in March 2011.
Target now projects first-quarter profit of as much as $1.10 a share, up from a previous forecast of as much as $1.07. Food sales led the gains, increasing at a mid-teen percentage rate, CEO Gregg Steinhafel said on a conference call today.
Teen retailers Wet Seal Inc. and Buckle Inc. missed analysts’ estimates for same-store sales. Wet Seal, based in Foothill Ranch, California, reported sales that fell 7.8 percent, steeper than the estimated 5.9 percent drop, as purchases of tops and jewelry declined. Kearney, Nebraska-based Buckle said sales rose 6.4 percent, trailing the estimated 7.8 percent gain.
Zumiez Inc., the sports-apparel retailer that also targets teens, yesterday reported a 14 percent increase in same-store sales for March, beating estimates for a 10 percent rise. The company “continues to be one of the least promotional teen retailers,” and is snapping up market share, especially as competitor Pacific Sunwear of California Inc. shrinks, Adrienne Tennant, a Washington-based analyst at Janney Montgomery Scott LLC, said in an e-mailed note today.
Costco Trails Estimates
Costco Wholesale Corp., the largest U.S. warehouse-club chain, reported sales that rose 6 percent, missing analysts’ estimates of 6.5 percent. The Issaquah, Washington-based company cited a decline in its electronics business and impact from foreign currency exchange rates in a conference call today.
Excluding Walgreen Co., which posted a 6.8 percent decline in comparable sales, same-store sales for the chains tracked by Retail Metrics rose 6.5 percent for March.
“We’re not expecting the same kind of numbers in the month of April, but certainly February and March are two very good months,” Lakner said. “You do have to consider March and April together.”
Most chains count locations open at least a year to tabulate same-store sales. The revenue is a key indicator of a retailer’s growth because new and closed sites are excluded.
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