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U.S. Retailers Missing Estimates by Most in 13 Years

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May 23 (Bloomberg) -- U.S. retailers’ first-quarter earnings are trailing analysts’ estimates by the widest margin in 13 years after bad weather and weak spending by lower-income consumers intensified competition.

Chains are missing projections by an average of 3.1 percent, with 87 retailers, or 70 percent of those tracked, having reported, researcher Retail Metrics Inc. said in a statement today. That’s the worst performance relative to estimates since the fourth quarter of 2000, when they missed by 3.3 percent. Over the long term, chains typically beat by 3 percent, the firm said.

Extreme winter weather through February and March forced store closings and stifled sales, Swampscott, Massachusetts-based Retail Metrics said. Lower- and moderate-income consumers had little discretionary spending power, and chains also faced price competition from e-commerce sites.

“The American consumer is not fully back and remains cautious,” Ken Perkins, Retail Metrics’ president, wrote in the report.

What’s more, the expectations the chains are missing have been significantly lowered. While analysts now project retailers’ earnings fell an average of 4.1 percent, back in January they had estimated a 13 percent gain.

Most retail segments are showing profit declines, with department stores, teen-apparel chains and home-furnishing stores faring the worst, Retail Metrics said. About 41 percent of retailers have missed estimates, while 45 percent have beat.

Improved weather, pent-up demand and better employment trends may help the industry in the second quarter, Perkins said. Analysts are projecting an 8.6 percent gain in profit for the current three-month period, he said.

The Standard & Poor’s 500 Retailing Index was up 0.9 percent at the close in New York, while the S&P 500 was 0.4 percent higher. The retailing index fell 7.8 percent this year, compared with a 2.8 percent advance in the broader index.

To contact the reporter on this story: Cotten Timberlake in Washington at ctimberlake@bloomberg.net

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net Kevin Orland, John Lear

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