Weak April retail sales bring May jitters

Saks Inc. said same-store sales rose 11.7 percent in April, citing strength in areas such as designer sportswear and handbags.

On the other hand, Federated Department Stores Inc., parent to Macy’s, said same-store sales fell 2.2 percent, compared with a forecast that had called for sales to rise slightly during the period. The company also said same-store sales for May are expected to be flat or down 2 percent.

Kohl’s Corp. said same-store sales fell 10.5 percent for the April period, due to the expected shift in Easter sales and other factors. Still, the company said it remained comfortable with analysts’ expectations for its overall quarterly financial results.

More specialized retailers also were hard-hit. Clothing retailer Gap Inc. continued to struggle, reporting a 16 percent drop in comparable-store sales for April. Abercrombie & Fitch said same-store sales fell 15 percent for the period.

Despite the disappointing April period and other factors weighing on consumers, even Davidowitz doesn’t think it’s all gloom and doom. After all, the unemployment rate is relatively low and the stock market has been showing strong returns. Those factors should help mitigate things like gas prices and housing doldrums, he said.

Still, even the best-run retail business will be hurt if people start spurning certain products. Niemira expects weakness in the housing market to be a driving factor in crimping retailers who sell everything from furniture to electronics.

“Anything that ripples from housing expenditures, I think, is hurting,” he said.

If retail spending weakness does persist through the coming months, there will be a silver lining — for bargain-conscious consumers anyway.

“You will probably see more discounting,” Niemira said. “It’s good news for the consumers, bad news for profits and investors.”

Other industry watchers are more optimistic about how much consumers will be willing to spend in the coming months. Analyst Marshal Cohen with NPD Group said there were plenty of unusual factors that contributed to a weak April, but that doesn’t make him too worried about the overall picture.

For example, he doesn’t think rising gas prices will have much of a long-term effect on consumer spending unless they hit $4 a gallon. He also is less concerned about the housing doldrums than some other analysts, at this point.

But Cohen said he is watching closely to see whether the number of houses on the market grows substantially, pointing to bigger problems. If gas prices do hit the $4 mark, he says that also could start crimping spending beyond just low-income shoppers.

Cohen also is watching such disparate factors as the price of basic essentials including milk, the health of the job market and the amount of money single women are spending.

If any of those factors take a sharp turn for the worse, then he said it could point to longer-term weakness. But for now, he said he’s hesitant to read too much into April’s showing.

“April’s going to look tough,” he said. “It’s going to scare off the amateur investor, it’s going to scare off the naysayer. The real issue here is you can’t judge everything by one month alone.”

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