Does April Look Promising for Retailers? - Analyst Blog
2013年4月17日 - 7:30PM
Zacks
After a disappointing sales performance in March, it remains to
be seen how things are shaping up for retailers in April. Higher
Social Security Payroll taxes, unexpected cold weather and
political gridlock and brinkmanship dampened the mood of shoppers
in March. Retail sales fell 0.4% last month, the biggest drop since
June last year, according to the U.S. Department of Commerce.
This is the second time in three months that retail sales have
tumbled. The figure had fallen 0.1% in Jan 2013 but improved 1% in
February. A sluggish recovery in the labor market is also cited as
one of the factors hurting consumers’ enthusiasm. The data from
Labor Department suggested that the economy infused 88,000 jobs in
March, far less than the average 220,000 jobs added in the prior
four months.
As a whole, Mar 2013 was tough for most retailers, who witnessed
sluggish comparable-store sales. The retail chains like The
Cato Corporation (CATO), Gap Inc. (GPS)
and The TJX Companies, Inc. (TJX) witnessed comps
decline of 11%, 1% and 2%, respectively. Buckle
Inc. (BKE) posted flat comps, while Fred’s,
Inc.’s (FRED) comps fell 3%.
However, a few retail chains were able to navigate through this
challenging economy. Among these, Costco Wholesale
Corp (COST), Limited Brands Inc. (LTD)
and Ross Stores Inc. (ROST) reported
comparable-store sales growth of 4%, 3% and 2%, respectively.
But now, the biggest question is whether April holds promises
for retailers, after the March debacle. We will try to analyze this
from an overall economic perspective.
Higher taxes, weak job prospects and lower discretionary
spending could mark soft sales for April. Moreover, a tightening
fiscal policy is hampering consumer confidence. A preliminary
reading by Thompson Reuters and the University of Michigan revealed
that consumer sentiment fell sharply to 72.3 in April from 78.6 in
March, and reached the lowest level since Jul 2012.
To insulate themselves from these hurdles, retailers might go
for heavy discounting to attract consumers and clear their
inventories but this could dent their margins.
On the other hand, some believe that improvement in weather
conditions, the calendar shift in Easter to March this year from
April last year, and the expected fall in gasoline prices along
with tax refunds that are gradually making their way in, could lead
to a rise in discretionary spending and in turn better sales in
April.
But with economy yet to show full recovery and the unemployment
rate hovering around 7.6%, April might see cautious consumer
spending.
BUCKLE INC (BKE): Free Stock Analysis Report
CATO CORP A (CATO): Free Stock Analysis Report
COSTCO WHOLE CP (COST): Free Stock Analysis Report
FREDS INC (FRED): Free Stock Analysis Report
GAP INC (GPS): Free Stock Analysis Report
L BRANDS INC (LTD): Free Stock Analysis Report
ROSS STORES (ROST): Free Stock Analysis Report
TJX COS INC NEW (TJX): Free Stock Analysis Report
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