Retailers post weakest March sales in 13 years

A sluggish job market is adding to worries. On Thursday, the Labor Department said that applications for jobless benefits totaled 357,000 last week, down by 53,000 from the previous week. Even with the improvement, the four-week average for claims rose by 2,500 to 378,250, the highest level since early October 2005.

While many economists believe that the country is in a recession, the Bush administration says that growth should revive this summer when 130 million households start spending their economic stimulus checks. Any boost in sales could be temporary, however, as analysts believe many shoppers will use a chunk of the money to pay down debt.

Michael P. Niemira, chief economist at the International Council of Shopping Centers, says that the malaise could continue into 2009. The rebate checks, he says, will “buy retailers some time,” but without an improvement in key areas like housing, a recovery in spending won’t happen anytime soon.

Niemira expects that for the combined March-April period — retailers’ key spring selling period — sales will be up only about 1 percent. That pace is below the 2.1 percent average seen last year, which was slower than the 3.6 percent figure in 2006.

Wal-Mart was a bright spot. It reported a 0.7 percent gain in same-store sales, excluding sales results from fuel. That was slightly below the 1.0 percent estimate by analysts surveyed by Thomson Financial, however.

Wal-Mart still raised its first-quarter earnings outlook because of better inventory controls that yielded fewer markdowns and reduced store theft. The company also benefited from strong sales of groceries, video games and other electronics.

Rival Target Corp., which has been stumbling lately, posted a 4.4 percent decline in same-store sales. Analysts had expected a 2.7 percent decrease.

Costco posted a 7 percent gain in sales, higher than expected, with much of the gain coming from gasoline sales.

Many department stores and apparel chains suffered, though.

Among department stores, J.C. Penney posted a larger-than-expected 12.3 percent sales decline. The department store retailer had warned late last month that same-store sales would be down at least 10 percent amid a souring economy.

Saks reported a 2.9 percent decline in same-store sales, worse than the 3.5 percent gain that Wall Street anticipated. Nordstrom had a 9.1 percent decline in same-store sales; analysts had expected an 8.0 percent drop.

Limited Brands reported an 8 percent drop in sales. Gap had an 18 percent drop in same-store sales, dragged down by a 27 percent drop at its Old Navy division.

Teen merchants, which typically are more recessionary proof than other categories, stumbled last month, too. After filling the family car’s gas tank, teenagers may have little left over for that new pair of sneakers or a skirt.

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