Major retailers such as Costco and Macy's reported on Thursday that April revenue rose less that 1 per cent in the worst performance since 2009 when the U.S. economy was just coming out of a bad recession.
The disappointing results follow two consecutive months of strong sales that were boosted by positive economic news about the job and housing markets.
"The economy is growing in fits and starts, and we are seeing sales shoot up and down," said Michael P. Niemira, chief economist at International Council of Shopping Centers. "We're in a choppy period."
A small group of merchants representing roughly 13 per cent of the US$2.4 trillion U.S. retail industry report monthly revenue at stores open at least a year, a key measure since it excludes results from locations that open and close during the year. Still, the figures offer a snapshot of consumer spending, which accounts for more than 70 per cent of economic activity. And recently, it's shown that Americans' spending sways with the wave of economic news.
An average of April's results for 22 retailers nationwide rose 0.6 per cent — the worst since November 2009 when the tally was down 0.2 per cent, according to The International Council of Shopping Centers. The recession officially ended in June 2009. That's in stark contrast to February and March when the group posted an average 4.1 per cent sales gain on signs the economy was improving.
The latest results are impacted by a flurry of negative economic news. Government reports on jobs and housing in recent weeks have renewed concerns that the economic recovery is facing a spring slowdown for the third straight year. And the stock market rally also has lost some steam amid worries about the European financial crisis and the economy at home.
Other factors also helped dampen sales. For instance, analysts believe an earlier Easter, which was on April 8 and occurred 16 days earlier than last year, pushed sales out of April into March. Retailers blame a late Mother's Day for pushing some sales out of April and into May. And unusually warm February and March pulled forward some sales that would have normally occurred in April.
Cassie Batinich said she enjoyed the warmer temperatures and went on a buying spree in February and March. She spent $500 on wedge sandals and clothing at Bloomingdale's, H&M and Barneys New York. But since the beginning of last month, the 25-year-old New York City resident has cut back.
"I jump started on my shopping because the weather was nice," said Batinich, who works in public relations.
Such a pullback from shoppers like Batinich showed up in April's results.
Macy's Inc., which runs Bloomingdale's in addition to its namesake stores, said that it expected its April sales to be softer than in March in part because of the earlier Easter. It also said its results were impacted by a move of a cosmetics event in its stores to March from April.
As a result, Macy's posted a 1.2 per cent increase in April revenue at stores open at least a year, missing the 1.9 per cent rise predicted by analysts polled by Thomson Reuters.
Others posted disappointing results, too. Costco Wholesale Corp. said its revenue from stores open at least a year rose 4 per cent in April, below the analysts' estimate of a 5.1 per cent increase from the wholesale club operator. Meanwhile, Target Corp. said its sales rose 1.1 per cent in April, missing the 2.8 per cent increase analysts had expected.
But April's results did give retailers — and economists — reason to be optimistic.
Not everyone posted worst-than-expected figures. TJX Cos., which runs Marshalls, T.J. Maxx and HomeGoods, reported that revenue at stores open at least a year rose 6 per cent in April, topping Wall Street's forecast of a 4 per cent rise. The company also boosted its first-quarter and fiscal 2013 earnings outlooks.
Retailers tend to study the combined March and April figures because it's a better gauge of spending for the overall spring season than a single month. Sales for the combined two months were up 2.4 per cent, which is a decent performance for this time of year.
"It's been a strong spring for many retailers," said Michael Brown, a partner in the retail practice at A.T. Kearney, a global management consulting
In fact, despite the weak finish to the first quarter, Target said Thursday that revenue in stores open at least a year rose 5.3 per cent during the February through April period, the strongest performance in six years for that period.
And there are still signs that the economy is improving. For instance, The Labor Department reported on Thursday that the number of people seeking unemployment benefits fell last week by the most in more than three months. Last month, applications jumped after steadily declining in the fall.
"This is a two-to-three month story," said Alison Jatlow Levy, a retail strategist at consulting firm Kurt Salmon. "The U.S. economy isn't out of the woods."Suggest a correction