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Americans Still Shopping - But a Little Bit Less

by ANNE D’INNOCENZIO
Thursday May 10, 2012
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NEW YORK (AP) - Americans are still shopping, but not as much as expected.

Big retailers including Costco, Macy’s and Target on Thursday reported sales in April that missed Wall Street estimates as colder temperatures, an early Easter and renewed worries about the economy dampened shoppers’ enthusiasm to buy.

The disappointing results follow two months of strong sales that were boosted by a combination of warmer weather and optimism amid a flurry of positive economic news.

"Early results show there was a sequential slowdown from a particularly strong February and March," said Ken Perkins, president of Retail Metrics LLC, a research firm. "Weather cooled, and consumers took a bit of a breather. But spending is still decent."

Only a handful of retailers report monthly figures based on stores open at least a year, a measure that’s considered an indicator of a merchant’s health because it excludes results from locations that open and close during the year. The group accounts for about 13 percent of overall U.S. retail sales, excluding gas, autos and online-only merchants like Amazon.com.

Still, economists and other industry watchers say the figures offer an important snapshot of consumer spending, which accounts for more than 70 percent of all economic activity. Recently, Americans spending patterns have gone in lockstep with the wave of positive and negative economic news.

Last month, for instance, analysts were optimistic that Americans who had cut back on spending during the slow economy were beginning to come back. During the month, 22 retailers posted an average 4.1 percent gain in sales for March. But April was a different story.

Retailers tend to study the combined March and April figures because it’s a better gauge of spending for spring than considering a single month.

Government reports on jobs and housing in recent weeks has raised 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.

Last month, merchants also were grappling with other factors that helped to 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. They also think that an unusually warm February and March pulled forward some sales that would have normally happened in April.

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 percent increase in April revenue at stores open at least a year, missing the 1.9 percent 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 percent in April, below the analysts’ estimate of a 5.1 percent increase from the wholesale club operator. Meanwhile, Target Corp. said its sales rose 1.1 percent in April, missing the 2.8 percent increase analysts had expected.

But not everyone posted disappointing results. TJX Cos., which operates Marshalls, T.J. Maxx and HomeGoods, reported that revenue at stores open at least a year rose 6 percent in April, topping Wall Street’s forecast of a 4 percent rise. The company also boosted its first-quarter and fiscal 2013 earnings outlooks.

Given a number of special factors, retailers tend to study the combined March and April figures because it’s a better gauge of spending for spring than considering a single month.

"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."

Copyright Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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