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By ANNE D'INNOCENZIO, AP Business Writer
NEW YORK - The nation's retailers extended their winning streak to
a fourth month during March, boosted by a flood of new fashions that
gave even long-struggling department stores a lift.
Wal-Mart Stores Inc., Gap Inc., J.C. Penney Co. Inc., and Nordstrom
Inc. were among the stores with better-than-expected sales. The few
disappointments included Sears, Roebuck and Co. and Kohl's Corp., whose
results fell below Wall Street expectations.
"The month is the strongest of the year so far, and I suspect that
it will be the strongest performance for the whole year as well,"
said Michael P. Niemira, chief economist at the International Council
of Shopping Centers.
But retailers face potential problems in the months ahead, among them
rising gasoline prices and lingering job weakness, that could stall
their momentum, Niemira said.
The International Council of Shopping Center-UBS sales tally was up
7.0 percent in March, topping Niemira's estimate of 6.5 percent. That
compares with a 0.2 percent decline a year ago, when business was hurt
by the U.S.-led war in Iraq (news - web sites). The tally is based on
what the industry calls same-store sales, those from stores open at
least a year. They are considered the best measure of a retailer's health.
Department stores and mall-based apparel stores reported consumers responded
enthusiastically to new fashions. Bright colors like hot pink and lime
green and new career lines from Tommy Hilfiger and Calvin Klein helped
draw shoppers to department stores.
A number of retailers, including Target Corp., Penney and Federated
Department Stores Inc. raised their first-quarter profit outlooks, noting
that consumers were buying at full-price rather than waiting for markdowns.
Niemira added that warmer weather helped retailers earlier in the month,
although sales decelerated in the last week when temperatures fell.
March was the fourth month in a row that retailers had strong sales.
After reporting same-store sales of 4.3 percent in December, so far
in 2004, stores have done even better, averaging about 6.6 percent.
Niemira said the January-March sales performance is the industry's best
performance since the July-September 1999 period, when same-store sales
averaged 6.8 percent.
The release of retailers' results coincided with a Labor Department
(news - web sites) report that new claims for unemployment benefits
dropped last week to the lowest level in more than three years. For
the work week ended April 3, new applications filed for jobless claims
declined by a seasonally adjusted 14,000 to 328,000.
Last week, the government reported a better-than-expected increase in
new jobs.
Tax refunds and low interest rates, which have spurred more mortgage
refinancing, have given consumers the extra cash to spend in the short
term. But whether that spending pace will remain strong in the second
half once these factors start to wane remains to be seen.
Steve Spiwak, an economist at Retail Forward, a management and marketing
consulting firm in Columbus, Ohio, believes that "high-end and
value retailers should continue to post healthy gains."
But he said that mid-priced stores will still face challenges as middle-income
households wait to see if the job rebound is sustainable before increasing
their spending.
Wal-Mart announced a 6 percent gain in same-store sales, while analysts
surveyed by Thomson First Call expected 5.7 percent.
Rival Target had a 7.3 percent gain in same-store sales, besting Wall
Street's projections of 6 percent.
High-end stores like Nordstrom and Neiman Marcus Group, the early beneficiaries
of the economic recovery, extended their winning streak. Nordstrom posted
a 15.9 percent gain in same-store sales, well exceeding the 8.1 percent
expected by analysts.
Neiman Marcus had a 25.7 percent gain in same-store sales, surpassing
the 15.4 percent estimate.
Saks Inc., which operates Saks Fifth Avenue and traditional department
stores including Proffitt's, said same-store sales were up 9.5 percent.
Analysts expected 7.5 percent.
Federated, citing strong sales in career apparel and accessories, reported
a 6.8 percent gain in same-store and total sales in March. Analysts
expected a 5.8 percent increase.
J.C. Penney said same-store sales in its department store business
rose 11.4 percent. Analysts expected a 7.3 percent gain.
May Department Stores Co. reported same-store sales were up 10.9 percent,
more than double Wall Street's estimate of 4.5 percent.
But Kohl's reported a 0.9 percent same-store sales decline. Analysts
had expected a 2.9 percent gain.
Sears' same-store sales results in its domestic business were up 0.1
percent, a bit below the 0.3 percent Wall Street expected.
Gap reported an 8 percent increase in same-store sales, beating projections
of 5.9 percent.
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