Target, Macy’s Sales Trail Estimates After Early Easter
U.S. retailers’ same-store sales trailed analysts’ estimates for the first time in five months as the earlier Easter holiday pulled sales into March and cooler weather cut mall traffic.
Sales at Target Corp. (TGT), the second-biggest U.S. discount chain, rose 1.1 percent, falling short of the average projection for a 2.9 percent gain from analysts surveyed by researcher Retail Metrics Inc. Macy’s Inc. (M), the second-biggest U.S. department-store chain, posted a 1.2 percent increase in same-store sales, missing the 1.9 percent estimate.
Retailers faced slowing sales gains after Easter fell more than two weeks earlier this year and pulled some shopping into March, when sales gained 3.9 percent. Same-store sales for the more than 20 retailers tracked by Retail Metrics rose 0.8 percent in April, compared with estimates for a 1.5 percent gain, the first time they’ve trailed since November.
“There was a little bit of an optimism overhang coming into April that didn’t come to fruition,” Joel Bines, a Dallas-based managing director in the retail practice at AlixPartners, said in a telephone interview. “The holiday shifts were especially difficult and there was cold weather along the East Coast towards the end of April, which is always a challenge.”
Target fell 2.5 percent to $56.55 at the close in New York. Macy’s rose 0.7 percent to $41.55.
Gap Inc. lost 1.6 percent to $28.67 after reporting same-store sales that fell 2 percent, worse than the estimate for a 0.9 percent decline. While Gap North America sales increased by 4 percent from 2 percent last year, Old Navy and the international segment saw declines from the earlier period.
Old Navy, which had a 6 percent tumble in comparable-store sales from a 14 percent increase a year ago, was especially hurt by the earlier Easter “given a greater merchandise focus for the holiday,” Erika Maschmeyer, an analyst with Robert W. Baird & Co. in Chicago, said in a note today.
Some stores, particularly value-oriented retailers, fared better than expected in April, Bines said.
TJX Cos., the operator of T.J. Maxx discount stores, said April same-store sales rose 6 percent, beating the average estimate for a 3.5 percent increase. The company boosted its forecast for first-quarter profit to 54 cents per share from as low as 51 cents. The stock fell 0.2 percent to $42.45.
Department-store chain Nordstrom Inc. (JWN) said sales rose 7.1 percent in April, beating estimates for a 6.2 percent gain.
Limited Brands Inc., the Columbus, Ohio-based operator of the Victoria’s Secret lingerie chain, said sales in April rose 6 percent, beating estimates of 3.9 percent. The shares rose 2.5 percent to $51.70 to the highest on record.
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.
“There was a lot of enthusiasm in the March numbers, which were really good, and the hope was they weren’t borrowing from April sales but were showing an exciting new trend,” said Barbara Kahn, a professor of marketing and director of the Baker Retailing Center at the University of Pennsylvania’s Wharton School. “It doesn’t look like that was the case.”
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