Shoppers Hit the Malls in March Despite Higher Gas Prices

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costcoShoppers shrugged off higher gas prices and cool temperatures to give retailers a surprisingly strong March.

The retail revenue figures released Thursday extend the streak of solid spending from late last year and indicate that recent job growth is tempering worries about higher pump prices.

A broad range of stores from Costco Wholesale Corp. to Victoria's Secret parent company Limited Brands Inc. reported revenue gains that handily beat Wall Street expectations. Target Corp. reported a smaller decline than Wall Street expected.

"Neither the lack of the Easter Bunny, nor cool temperatures or spiking gas prices could keep consumers at bay," said Ken Perkins, president of RetailMetrics LLC, a research firm. "There is still a significant amount of pent-up demand. I think the job recovery is catching on."

Gap Inc. was one of the few big losers, reporting a decline that was worse than expected and warning of disappointing earnings. Japan's earthquake, tsunami and nuclear crisis also took a toll on Gap, which operates 150 stores there, the retailer said.

The figures are based on revenue at stores open at least a year and are considered a key indicator of a retailer's health.

The results are particularly encouraging because March 2010 spending was boosted by an early Easter. This year, Easter falls on April 24, three weeks later than last year. That puts holiday spending into April and depressed Marches results anywhere from 3 to 5 percentage points.

Many retailers were expected to report declines. Analysts say combining March and April figures gives the best read on consumer spending.

According to a preliminary count by Thomson Reuters, 11 retailers beat expectations, while four missed.

On March 1, national average for a gallon of unleaded regular was $3.375. At end of month it was $3.606, according to AAA, Wright Express and Oil Price Information Service.

Many other prices also are increasing. Food prices are expected to rise 3 percent to 4 percent this year, with the steepest hikes in dairy, meat and coffee. Clothing sellers are raising prices to offset soaring costs for labor in China and for raw materials like cotton.

Consumers surveyed in March for the Conference Board's Consumer Confidence Index voiced concerns about inflation and stagnant incomes. The index fell sharply from a three-year high in February, reversing five straight months of improvement.

But analysts say that March's revenue results shows that shoppers' focused on the solid gains in job growth, which gained momentum last month. Companies added workers at the fastest two-month pace since before the recession began.

Costco said Thursday that revenue at stores open at least a year, excluding membership fees, climbed 13 percent last month, handily beating Wall Street expectations. Analysts expected a 7.4 percent increase.

Taking out rising gas prices and strengthening foreign currencies, sales at stores open at least a year climbed 8 percent.

Target posted a 5.5 percent drop in March, but the decline was smaller than the 6.4 percent expected.

The discount chain says groceries were its best-selling category. Clothing also sold well, particularly workout clothes. Weaker categories included movies, books and home products. The later Easter particularly hurt sales of candy, clothing and toys.

The discounter expects the figure to rise in the mid-teens percentage range in April with the Easter boost.

Macy's Inc. reported a 0.9 percent increase, better than expected, as shoppers picked up new spring clothing.

"March sales exceeded our expectations and demonstrated that our spring fashion assortments are hitting the mark with customers," CEO Terry J. Lundgren said in a statement.

Limited reported a robust 14 percent gain, sharply higher than analysts expected, driven by strength at its Victoria's Secret stores.

The company said a later Easter this year hurt revenue in stores open at least a year by 3 to 5 percentage points. Analysts polled by Thomson Reuters expected a much smaller 1.5 percent gain.

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18 Comments

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stubit586

This must be the cause of the article I just read about Americans not saving enough for their future needs and eventual retirement.

April 08 2011 at 3:56 AM Report abuse rate up rate down Reply
actionhero

Another opportunity for greatness squandered. There is little room between "Ideology" and "Idiocy". At least in my dictionary.

April 07 2011 at 5:27 PM Report abuse rate up rate down Reply
amani4000

300,000 jobs a month, for the next 60 months straight, and we will still have around 3% unemployment. Reports out today in NYC say mall and retail rentals are at a ten year low. Why is the liberal mainstream media trying to pump up one company's profit,so w3e feel all warm and good inside? Seniors are screwed, as well as most of the rest of us. This economy sucks, and it will only get worse. Anyone who thinks things are rapidly improving for the better of all is a fool.

April 07 2011 at 3:22 PM Report abuse rate up rate down Reply
inasctg56

In the midwest those manufacturing plants that Obama attended are now hiring at $12 to $18 an hour. But he was just campaigning.

April 07 2011 at 3:20 PM Report abuse +1 rate up rate down Reply
1 reply to inasctg56's comment
wfreeberg

With all the perks of a factory job, regular hours, premium pay for OT and shift diff, etc, one can easily get to the $60k/year. Many of us work 60+ hours/wk, no wage perks and if we don't make our numbers we are down the road. I've been doing it for close to 50 years but lacked the brains to take a secure $12-$18/Hour factory job.

April 07 2011 at 6:07 PM Report abuse rate up rate down Reply
inasctg56

What have the dems done? Passed legislation in 2007 that took money away from big oil and steered it toward our auto industry for R&D with mandates for better mileage and now low and behold we have suv's that get 32 mpg as well as waiting lists for chevy volts (almost all US auto workers are back to work), electric batteries being built here (500 at just one plant that pays $14 to $18/hour), and charging stations being made in this country. They eliminated the tax incentives for corporations to go overseas, they eliminated the 5.25% tax rate for those overseas profits, they passed legislation for 100% write offs for improvements made in this country that has demand way up for machinery and equipment, they gave the IRS the resources to go after offshore accounts with over 14,000 coming forward, they passed banking legislation that addresses the problems of the 2002 banking legislation that allowed predatory lending and less govt oversite on wallstreet, they've created 1.3 million jobs in 13 months, manufacturing and export gains for 20 months, and more. What's the gop done? Cut jobs and wages while handing even more over to corporate tax cuts.

April 07 2011 at 3:18 PM Report abuse +1 rate up rate down Reply
inasctg56

1.3 million jobs in 13 months, 20 months of manufacturing and export gains, retail sales up, unemployment claims down, demand for machinery and equipment up. All those manufacturing paychecks are coming back into communities and creating demand for goods and services just like the economists said.

April 07 2011 at 3:17 PM Report abuse +1 rate up rate down Reply
l07hye

Lies, Lies and more lies.

April 07 2011 at 12:59 PM Report abuse -1 rate up rate down Reply
kingman99

Your information is old news, with the current gas price's the malls will be ghost towns.
The only places that will be worth going to is Costco. Sam's in my opinion is now either the same price as supermarkets or more. And that is not to mention that Sam's forces the consumer to buy large quantities that go bad if not consumed in a short period of time.
Also in Sam's their beer and liquer prices are higher then most and this was not the case 3 years ago.

April 07 2011 at 12:22 PM Report abuse -1 rate up rate down Reply
1 reply to kingman99's comment
wfreeberg

Not sure where you live but in the Midwest the Malls are busy.

April 07 2011 at 2:28 PM Report abuse +1 rate up rate down Reply
donut999

They also need to take a longer view. You could rework the words on most of these stories to something like "retail sales (or some other stat) although miserable, were better than we expected and above the comparable level one year ago.

April 07 2011 at 12:16 PM Report abuse rate up rate down Reply
donut999

Ramble on with 1,000's of words. Maybe it is as simple as income tax refund season and consumption withdrawal?

April 07 2011 at 12:13 PM Report abuse +1 rate up rate down Reply