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Weak Comps, Early Easter and Pent-Up Demand Make for Boffo Same-Store Sales in March

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A confluence of factors--weak year-over-year comparisons, pent-up demand and the "Easter shift"--all helped to make March a huge month for retailers.

ICSC, Retail Forward, Retail Metrics and RetailSails have all crunched the numbers from the publicly-traded retailers that report same-stores sales and the figures show that the post-holiday shopping period went well for most firms. Retail Forward and RetailSails recorded the gain as 9.2 percent. ICSC said sales rose 9.0 percent. Retail Metrics said same-store sales rose 8.7 percent.

However, the big swings in the date of Easter from year to year create a lot of noise in the March/April figures. We will have a much better picture of the true state of things in another month when we can view the two-month period in its totality. And on that front ICSC is projecting April sales will be flat to down 3.0 percent.

There are a number of good write-ups putting the numbers into perspective. Even if the results are explainable, they did exceed expectations. Nevertheless, it's easy to get swept up in the idea that retailers are now soaring when there remain a ton of difficulties for consumers including depressed housing prices, declining availability of credit, stagnating wages and high unemployment.

The Big Picture blog points to some additional reasons why consumers have climbed out of their bunkers, but cautions against putting too much stock in the same-store sales figures. But Mike Shedlock argues that consumers face a litany of challenges, including the imbalances in the distribution of financial wealth. Shedlock argues, for example, that the bottom 90 percent having little wealth outside the value of their houses and high debts due to large mortgages mean that any boosts to consumer spending will be short lived.

ICSC's tally shows that same-store sales rose 9.0 percent in March.

ICSC's numbers are based on 31 retailers. In the commentary in its monthly report, ICSC said:

Many retailers were negatively impacted by February's severe snowstorms, especially in the Northeast. ICSC figures that the industry‐wide weather drag on the February sales growth rate was worth about one percentage point. However, that did not seem to bring to a halt the retail recovery, even in the most weather‐sensitive segments. For example, apparel‐specialty store sales posted a solid 6.8% gainits strongest performance since March 2007 (+7.0%which was impacted by the Easter‐shift in the calendar). Macy's experience in February was typical of the industry. Macy's chairman, president and CEO Terry Lundgren noted that his company's February sales were strong...despite a series of winter storms that affected store operations in some of [Macy's] largest markets during key selling periods of the month.

Contributing to the strength in February chain‐store sales growth was the ongoing easy comparison with the same month of the prior year and a combination of stronger consumer demand in the aftermath of the 2007‐2009 recession's pent‐up spending and better retailer margins, inventory control, product right‐sizing and execution by the retailer.

Here are ICSC's results going back to 1993.

(Click for larger image.)

icsc mar 2010

According to Retail Forward, sales-weighted same-store sales excluding Walmart increased 9.2 percent in March for the 32 retailers that reported numbers. (A pdf with each retailer's results can be downloaded here.) Frank Badillo, senior economist at Retail Forward, said in a statement, Everything from the weather to the calendar helped drive more shoppers into retail stores in March. There will be let-up in April, but sales should hold up better than might be expected given the ongoing recovery in spending plans by shoppers.

Retail Metrics, meanwhile, reported that same-store sales increased 8.7 percent. That is the largest monthly comp increase for the firm's same-store sales index dating back to the start of 2000. Overall, the firm counted 31 chains posting gains while only 3 posted declines.

According to the firm's monthly report:

This has to go down as one of the more impressive sales month on record in the past decade.

As we pointed out in our note to clients yesterday, favorable weather, the Easter shift, pent up demand, higher tax refunds, easy comparisons, and an improving employment picture (today's weekly jobless claims not withstanding) all coalesced to generate a very robust March for retailers.

The fact that retailers vastly exceeded already raised expectations suggests to us that there is more going on here than just the Easter shift and easy comparisons. Consumers are generally feeling better about their plight and are finally making discretionary purchases and beginning to trade back up a bit. Department stores and Target had outstanding months.

RetailSails reached the same conclusion as RetailMetrics and says same-store sales rose 9.2 percent in March. The blog's figures include numbers from 30 different retailers. Of those, 27 posted gains and 16 posting double-digit increases.

On the face of it, the results look unbelievably impressive and seem to scream the consumer is back, but we must note that the early Easter likely played a significant part in the gains. With Easter falling 8 days earlier than a year ago, we estimate that at least half of this month's gains are due to the calendar shift.

As most companies noted in their press releases, a much better measure of performance will be the combined March-April results. As an example, Kohl's posted a 22.5% comp increase for March, but said April will likely show a low double-digit decrease due to the timing of Easter.

Here's one chart from the post, but there are more here.

(Click for larger image.)

retailsailsmarch

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Elaine Misonzhnik

Senior associate editor Elaine Misonzhnik has been writing for National Real Estate Investor since June 2006 and has covered commercial real estate for more than 12 years. She first became...
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