DOW JONES NEWSWIRES
Wal-Mart Stores Inc. (WMT) reported March same-store sales below
analysts' expectations, and numerous other retailers missed
downbeat estimates as consumer spending continues to drop.
Following a strong February and a March that was impacted by
Easter moving back to April this year, Wal-Mart expects earnings
and same-store sales for its fiscal first quarter coming in at the
high end of its forecast.
Easter selling is expected to be muted this year because of the
economic downturn, and analysts expect the later Easter to be
negative for March comparisons since people weren't doing their
Easter shopping in March. However, they said some retailers could
benefit from the extra shopping day in March. Last Easter, which
fell March 23, was the earliest in 95 years.
The world's largest retailer posted a 1.4% increase in U.S.
same-store sales last month, excluding gasoline sales, with the
namesake chain posting a 0.6% increase and Sam's Club seeing 6.2%
growth. March's results were driven by the health and wellness,
home and grocery segments.
Wal-Mart Vice Chairman Eduardo Castro-Wright said the company
expects Easter to drive April sales performance.
Wal-Mart's shares were down 4.6% at $50.19 in recent premarket
trading. The stock was up 11% in the last month as of Wednesday's
close.
The growth at Sam's Club was also seen at rival Costco Wholesale
Corp. (COST), which reported a 4% same-store-sales increase
excluding gasoline and currency fluctuations.
Separate indexes from Thomson Reuters and Retail Metrics are
expected to fall again in March despite last year's weak results
after a brief respite in February, when Wal-Mart's results drove
them above break-even. Excluding Wal-Mart, the projected slight
declines for last month could reach 5%.
The troubles reflect the weakened state of consumer confidence,
which edged up slightly in March after hitting an all-time low in
February. Lynn Franco, who runs the Conference Board's Consumer
Research Center, said consumers remain "extremely pessimistic"
about the short-term future and don't foresee a turnaround in
economic conditions over the next six months.
The expected drop is especially disheartening after a slight
increase in February broke a four-month string of declines. But
more retailers have beaten analysts' downbeat projections over the
last three months than those that have fallen short, so another
upside surprise may be possible.
Among other retailers, Children's Place Retail Stores Inc.
(PLCE) posted a surprise 2% drop in March same-store sales. Others
who missed analysts' views also included teen retailers Zumiez Inc.
(ZUMZ), which posted a larger-than-expected 18% drop, and Wet Seal
Inc. (WTSLA), which reported an 11% fall. Department store Stage
Stores Inc. (SSI) had a 15% decrease and teen retailer American
Eagle Outfitters Inc. (AEO) disappointed with a 16% drop.
Another teen retailer, Abercrombie & Fitch Co. (ANF), missed
estimates by 10 percentage points, posting a 34% tumble; these were
the lowest estimates projected for any company. The company has
been steadfast about refusing to cut prices, saying such a move
would devalue its brand.
High-flyer Buckle Inc. (BKE) again soared above its peers,
reporting a 15% jump, beating analysts' expectations of a 13% gain.
The company has posted double-digit growth in same-store sales for
20 straight months.
Teen retailer Hot Topic Inc. (HOTT) beat analysts' views for the
fourth straight month, with a same-store sales increase of 7.1%.
Limited Brands Inc. (LTD) also beat expectations with a 9%
decrease. Gap Inc. (GPS) also came in above views with an 8%
drop.
-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089;
kerry.grace@dowjones.com