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Apr 11, 2013
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U.S Chain store sales rise modestly as jobs and weather weigh

By
Reuters
Published
Apr 11, 2013

The labor market recovery showed signs of losing momentum in March as employers hired at the weakest pace in nine months, raising concerns about the impact on consumer spending. Many parts of the country also experienced the worst of winter in February and March, later than normal, leading shoppers to hold off on purchases of spring merchandise.

"Anyone who thinks the consumer will come swinging out of the gate is fooling themselves," said Alison Jatlow Levy, retail strategist at consulting firm Kurt Salmon.

TJX reported a 2 percent decline in March same-store sales, deeper than the 1 percent drop analysts were projecting. But the company said business improved as the weather warmed up, and Chief Executive Officer Carol Meyrowitz said April "was off to a good start."

POCKETS OF STRENGTH

Analysts expect 13 top U.S. retailers, including TJX Cos and Gap Inc, to post a 1.8 percent rise in same-store sales for March, according to Thomson Reuters, down from an increase of 2.9 percent a year earlier.

Gap Inc will report its results after the markets close.

There were at least some bright spots in the month, the economy and weather notwithstanding.

Victoria's Secret parent L Brands Inc reported higher-than-expected sales at all of its chains. Companywide, same-store sales rose 3 percent, while Wall Street expected them to be flat, according to Thomson Reuters data.

Low-priced retailer Ross Stores Inc, which has less exposure to the colder regions of North American than larger rival TJX, posted an unexpected gain in same-store sales. It now expects its quarterly profit to come in slightly above its earlier range of $1.00 to $1.04 per share.

Zumiez Inc and Buckle Inc, which cater to younger shoppers who are particularly exposed to the vagaries of the economy, both reported stronger-than-expected numbers. American Apparel Inc said its March same-store sales were up 8 percent.

Still, many retailers were hampered by the cold start to March, prompting many shoppers to put off buying warmer-weather clothing.

Also, Easter fell on March 31 this year, compared with April 8 last year. With colder temperatures and wintry weather leading up to the holiday, shoppers may have held off on buying new spring clothing.

Low-priced specialty clothing chain Cato Corp, regional department store operator Stein Mart Inc and discount general merchandise retailer Fred's Inc all blamed weather and Easter's timing for steeper-than-expected drops in March same-store sales.

Last week, Rite Aid Corp said its same-store sales fell 2 percent, but sales of general merchandise, a closer proxy to consumer discretionary spending, rose 3.8 percent.

Larger rival Walgreen Co reported a modest 0.7 percent same-store sales gain, with a better showing for general merchandise, which beat expectations.

Excluding Walgreen and Rite Aid, whose results are heavily skewed by prescriptions sales, Wall Street expects a gain of 2.2 percent in March same-store sales, down from a rise of 7.1 percent last year.

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