March '05 Gains Shaky, April '05 Sales Forecast Good
March sales bloomed because of an early Easter. Retail sales increased 4.1 percent over those of the previous year, according to the index maintained by the New York–based International Council of Shopping Centers. But March’s business stood on shaky ground, said Michael Niemira, chief economist at the ICSC.
“Overall, a 4.1 percent pace of sales looks good on the surface,” Niemira said. “Clearly, there was a lot of volatility within segments of the industry.”
Cold weather specifically dampened the traditional demand for new Easter clothes. The ICSC index showed that sales for apparel chain stores grew an anemic 0.6 percent, while luxury stores enjoyed a solid 4.4 percent growth over the last year.
Apparel sales could get a lift in April, according to Niemira, who said that sunny spring weather should jumpstart the demand for new clothes. Although retailers may be worrying about record high fuel prices, Niemira’s research showed that consumers continued to spend—even in California, where the average price for a gallon of gasoline topped off at $2.46 during the week of April 4, according to the U.S. Department of Energy.
On April 5, the ICSC released a survey stating that 59 percent of households reported that they had not reduced their spending over the last month on such items as clothing. These households were able to continue spending because gains in income outpaced increases in gas prices. Niemira estimated that the average weekly paycheck increased $14 over the past year, while growing gas prices added $6 to $8 to the average consumer’s weekly expenses.
“Yet other rising costs, such as health insurance and apartment rents, are chipping away at the average paycheck,” said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp. “That’s competition for the consumer dollar.”
Bebe Stores Inc., based in Brisbane, Calif., earned some of the biggest sales gains in March. The company enjoyed stellar sales throughout much of 2004 and reported same-store sales growth of 30.6 percent in March.
Long-beleaguered The Wet Seal Inc., based in Foothill Ranch, Calif., reported a whopping 36.3 percent comparable-store sales increase during the month. Jeffrey van Sinderen, a retail analyst for Los Angeles–based B. Riley & Co., said Wet Seal’s merchandising strategy to turn the company into a promotional low-price concept was working well. “They’re climbing their way back to where they were a couple of years ago,” Van Sinderen said, referring to the 2002 period that preceded the company’s dip into double-digit losses.
Sears Holding Corp. did not report March 2005 sales. Company representative Chris Brathwaite said the company will report monthly sales on a quarterly basis in the future, although no time has been set to report March 2005 sales. Sears Holding is listed as SHLD on the NASDAQ. —Andrew Asch
