March Numbers May Be High Point of the Year for Retailers
Posted: Tue Apr 13, 2004 3:57 pm
Tuesday, April 13, 2004
CHICAGO — Fatter income tax refunds, signs of economic health and a renewed appetite for fashion helped U.S. retailers deliver strong March sales, but Tuesday's data may be the high point for the year, analysts said.
Wall Street is watching warily for signs that consumer spending — and retail sector stock prices — will peter out as steep gasoline prices, worries about sustainable job growth, and the possibility of rising interest rates erode confidence.
Most major U.S. retailers reported strong March sales last week, foreshadowing Tuesday's U.S. Commerce Department (search) data that showed a 1.8 percent increase for the month. Wall Sthat tax-refund crutch is gone, it will take a lot more than one month of healthy payrolls growth for consumers to keep this heady pace going in the second half of the year," CIBC World Markets analysts said in a research note.
The Standard & Poor's retailing index (search) slipped 1.3 percent Tuesday morning, despite the strong sales data, as investors braced for mediocre sales figures ahead. The index has outperformed the S&P 500 in the year to date, even with Tuesday's decline, and is up some 9 percent from a mid-December trough because of solid first-quarter sales.
Retailers said customers spent bigger tax refund checks on items such as electronics in March. Stores also reported strong clothing demand as brightly colored spring fashions resonated with shoppers after several years of drab designs.
Sales continued strong through the first week of the April reporting period as shoppers stocked up on Easter clothing and decorations, but analysts widely expect a post-Easter lull next week, and expectations for the month are modest.
Merrill Lynch analyst Daniel Barry said he expects April sales at stores open at least a year — a key retail measure known as same-store sales — to show an increase in the range of 3.5 percent to 5.5 percent. That would be down from the 7.6 percent gain reported over the last two months.
Barry recently lowered his investment rating on several key retailing stocks, citing steep gasoline prices, possible interest-rate hikes after the U.S. presidential election, and tough comparisons with a relatively strong 2003 holiday shopping season.
Shari Eberts, retail analyst with J.P. Morgan, said sales results "can't get better from here" for most retailers after last month's strong performance.
Wal-Mart Stores Inc. (WMT), the world's biggest retailer and a barometer of retail sector strength, expects to reach only the low end of its April forecast for a 4 percent to 6 percent gain in sales at U.S. stores open at least a year.
CHICAGO — Fatter income tax refunds, signs of economic health and a renewed appetite for fashion helped U.S. retailers deliver strong March sales, but Tuesday's data may be the high point for the year, analysts said.
Wall Street is watching warily for signs that consumer spending — and retail sector stock prices — will peter out as steep gasoline prices, worries about sustainable job growth, and the possibility of rising interest rates erode confidence.
Most major U.S. retailers reported strong March sales last week, foreshadowing Tuesday's U.S. Commerce Department (search) data that showed a 1.8 percent increase for the month. Wall Sthat tax-refund crutch is gone, it will take a lot more than one month of healthy payrolls growth for consumers to keep this heady pace going in the second half of the year," CIBC World Markets analysts said in a research note.
The Standard & Poor's retailing index (search) slipped 1.3 percent Tuesday morning, despite the strong sales data, as investors braced for mediocre sales figures ahead. The index has outperformed the S&P 500 in the year to date, even with Tuesday's decline, and is up some 9 percent from a mid-December trough because of solid first-quarter sales.
Retailers said customers spent bigger tax refund checks on items such as electronics in March. Stores also reported strong clothing demand as brightly colored spring fashions resonated with shoppers after several years of drab designs.
Sales continued strong through the first week of the April reporting period as shoppers stocked up on Easter clothing and decorations, but analysts widely expect a post-Easter lull next week, and expectations for the month are modest.
Merrill Lynch analyst Daniel Barry said he expects April sales at stores open at least a year — a key retail measure known as same-store sales — to show an increase in the range of 3.5 percent to 5.5 percent. That would be down from the 7.6 percent gain reported over the last two months.
Barry recently lowered his investment rating on several key retailing stocks, citing steep gasoline prices, possible interest-rate hikes after the U.S. presidential election, and tough comparisons with a relatively strong 2003 holiday shopping season.
Shari Eberts, retail analyst with J.P. Morgan, said sales results "can't get better from here" for most retailers after last month's strong performance.
Wal-Mart Stores Inc. (WMT), the world's biggest retailer and a barometer of retail sector strength, expects to reach only the low end of its April forecast for a 4 percent to 6 percent gain in sales at U.S. stores open at least a year.