April retail sales figures offered more signs that consumers are starting to feel better about spending. But they are still keeping their budgets tight, sticking mostly to necessities such as groceries and health care products.
In a glimmer of hope for the broader economy, some mall-based clothing stores saw their declines stabilize and Wal-Mart, the world’s largest retailer, reported some strength in housewares and other discretionary goods. But with unemployment stubbornly high, the results may signal more bumping along the bottom than the beginning of a significant recovery
Among merchants that reported Thursday, Gap, American Eagle and Wet Seal posted smaller sales declines at their established locations than analysts had forecast. The Children’s Place, T.J. Maxx owner TJX Cos. Inc. and teen retailer The Buckle saw bigger gains than expected. But luxury stores again were hard hit as their higher-end wares find fewer takers.
“I think we are seeing signs of stabilization that is taking hold,” said Michael Dart, senior partner at consulting firm Kurt Salmon Associates. “But this will be a long, drawn-out recovery, rather than a quick rebound” amid a litany of economic problems.
Retailers benefited from warmer weather and people receiving their tax refunds. Signs that the economy is improving — a stock market rally and better news about the housing market — have boosted shoppers’ confidence.
Sales at stores open at least a year, or same-store sales, rose 0.7 percent last month, the first overall increase in six months, a tally by Goldman Sachs and the International Council of Shopping Centers found. Same-store sales, are a key indicator of retailer performance since they measure growth at existing stores rather than newly opened ones.
The figures were helped by the fact that Easter fell in April this year but March last year. Michael P. Niemira, chief economist at ICSC, said a better gauge thus was the overall March-April average, which was down 1.4 percent.
Economists closely monitor consumer spending because it accounts for about 70 percent of economic activity. Consumer spending grew by 2.2 percent in the first quarter of the year, the government said in late April, the biggest gain in two years. And polling group Gallup points to spending on discretionary items like gadgets — while still weak — stabilizing since February after a precipitous drop since last summer.
One of the biggest worries people still have is job security. New claims for jobless benefits fell to the lowest level in 14 weeks, the Labor Department said — a possible signal that the wave has peaked. Still, the number of unemployed workers getting benefits hit a new record.
As shoppers look for deals, Wal-Mart Stores Inc. is taking market share away from rivals. Its same-store sales rose 5 percent excluding fuel sales, more than the 2.9 percent increase that analysts surveyed by Thomson Reuters had expected. Necessities like groceries and health and wellness products were among its best-selling items, as well as more discretionary items like entertainment and home furnishings.
“We gained new customers, improved our market share position, and found that when customers had more money to spend, they spent it more often at Wal-Mart,” Vice Chairman Eduardo Castro-Wright said in a statement.
But he said the second quarter will be tougher compared with the same period a year ago, when people were receiving their government stimulus checks.
Target Corp. also said groceries and health care products were among the best sellers, but clothes and home products were weaker. Its same-store sales edged up 0.3 percent and the discounter predicted that first-quarter results will likely beat expectations.
At Costco Wholesale Corp., same-store sales dropped a bigger-than-expected 8 percent — hurt by closing on Easter. Food sales, including deli items, frozen foods and candy, continued to be robust. Sales in other categories such as electronics, audio, video, televisions and computers were softer.
Among clothing and department stores, there was guarded optimism. Macy’s Inc.’s same-store sales dropped 9.1 percent, worse than forecast, but the chain boosted its first-quarter outlook. J.C. Penney’s 6.6 percent drop was a little worse than Wall Street expected, but it also upgraded its first-quarter profit forecast.
In the luxury sector — where analysts such as Niemira say any improvements will be a real sign that spending is starting to turn around — there was as yet no sign of relief. Neiman Marcus Group Inc. said Thursday its same-store sales fell 22.5 percent in April. Saks Inc. reported a deeper-than-expected same-store sales drop of 32 percent.
April’s reports don’t prove a broadening recovery, Niemira cautioned, only that inventory cuts and stores closings are starting to have an effect. He believes stores will start to see a broader recovery in late summer.