Retailers posted surprise sales gains last month after rising U.S. employment prompted shoppers to spend more at chains including Costco Wholesale Corp. (COST:US), Saks Inc. and Limited Brands Inc.’s Victoria’s Secret.
Same-store sales at Victoria’s Secret rose 19 percent, more than 10 times the rate predicted by estimates compiled by Retail Metrics Inc. Industrywide, retailers posted a jump of 2.2 percent, compared with the average projection for a 0.5 percent drop.
Consumers, whose purchases account for about 70 percent of the U.S. economy, withstood a 7.2 percent surge in gasoline prices as they bought up clothes and luxury goods. Some have more to spend after the jobless rate fell to a two-year low last month, helped by employment in business services and health care.
“The momentum continues to build here, and as long as the jobs picture improves, retailers will be in good shape through June,” said Ken Perkins, president of Swampscott, Massachusetts-based Retail Metrics.
U.S. membership warehouse chain Costco rose 8 percent, compared with the average projection of 7.4 percent, according to Retail Metrics, which tracks more than two dozen chains.
Columbus, Ohio-based Limited rose 57 cents to $35.80 at 4 p.m. in New York Stock Exchange composite trading (LTD:US). Costco of Issaquah, Washington, advanced $2.83 to $77.82 on the Nasdaq Stock Market. The Standard & Poor’s 500 Retailing Index gained 0.4 percent.
Retailers weathered the loss of sales from a later Easter. The holiday occurred on April 4 in 2010, 20 days earlier than this year, and pulled sales into March. The later Easter reduced sales by as much as 5 percentage points, Limited said today in a recorded call (LTD:US).
Same-store sales at apparel chain Gap Inc. (GPS:US) dropped 10 percent, compared with the estimated decline of 7.3 percent. Last month’s earthquake and tsunami in Japan, where the retailer has more than 150 stores, cut into results, Chief Executive Officer Glenn Murphy said in a statement. The shares fell 34 cents to $22.72.
Most chains count locations open at least a year to tabulate same-store sales. This revenue is a key indicator of a retailer’s growth because new and closed sites are excluded.
Gasoline prices, which have increased by almost one-third from a year ago, didn’t appear to curb spending as much as expected, said Brian Sozzi, an analyst for Wall Street Strategies in New York.
“I’m surprised, because if you are paying more for gas, you are paying more for food and basic apparel,” said Sozzi. “It’s kind of a triple whammy and those are things the consumer didn’t have to deal with last year.”
Retailers including teen apparel chain The Buckle Inc., department-store Macy’s Inc. (M:US) and luxury retailer Saks Inc. surpassed estimates. Macy’s, the second-largest U.S. department-store chain, posted a 0.9 percent gain in same-store sales after analysts projected a decline of 3.6 percent.
Retailers as a group had surpassed analysts’ estimates in six of the past eight months. In March 2010, same-store sales tracked by Retail Metrics climbed 8.7 percent for the largest gain in a decade.
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