March Retail Sales Stung By Weather, Economy Slowing
Retailers hit a rough patch in March as severe winter weather, an economic speed bump and merchandise delays resulting from the West Coast port disruptions dragged down results, leading to the month’s sales gains falling below views.
Even amid the headwinds, L Brands (NYSE:LB), Stein Mart (NASDAQ:SMRT), Cato Corp. (NYSE:CATO) and PriceSmart (NASDAQ:PSMT) came shining through with same-store sales that sailed past views, according to data out Thursday.
March sales at stores open at least a year rose 0.5% vs. a year earlier, according to Ken Perkins, president of Retail Metrics. Analysts expected a 1% gain.
The results were weighed down by a big miss from warehouse club giant Costco Wholesale (NASDAQ:COST), Perkins says. The company saw March same-store sales slide 2% from a year earlier, short of views for a 0.3% decline.
That was the typical top retail performer’s first decline in monthly same-store sales since August 2009, Perkins says.
Fuel And The Freeze
Costco’s core U.S. same-store sales, ex gas and the effects of foreign exchange rates, were up a “much healthier” 4%, said Perkins. Still, they were below views for a 5.5% gain.
“Costco was a huge drag on the month,” Perkins told IBD. “Part of that was attributable to them having lower year-over-year gas prices, and foreign currency translations also weighed on their sales.”
The month’s results were a mixed bag.
Harsh winter weather conditions in parts of the U.S. such as the Northeast “weighed on sales” in those areas, said Perkins.
Consumers weren’t in the mood to buy seasonal goods like patio furniture and bathing suits or apparel when they were “freezing,” he said.
But Jacksonville, Fla.-based Stein Mart and Charlotte, N.C.-based Cato, located in the South, where the weather was better, posted double-digit gains in March same-store sales, he adds.
“Weather clearly played a big role overall (on the March results), both positive and negative,” Perkins said.
Another factor weighing on March sales was a slowdown in the economy in the first quarter, he adds. Perkins notes retailers also missed sales opportunities because of delays from late shipments due to the West Coast labor dispute.
“Overall I would not read too much into the March numbers,” Perkins said. “The jobs market stands on pretty solid footing, and with warmer temperatures I would expect May, June and July sales to show significant improvement from the first quarter.”
This month is apt to be weak, Perkins says, mainly because the early Easter this year, on April 5, pushed holiday-related sales into March.