- The Washington Times - Thursday, April 6, 2006

NEW YORK (AP) — A moderating economy and cooler weather gave consumers little incentive to shop in March and left retailers with tepid sales for the second month in a row. The later arrival of Easter this year also hurt business, but should help boost results in April.

As the nation’s merchants reported their monthly results yesterday, Wal-Mart Stores Inc., J.C. Penney, Gap, Abercrombie & Fitch and Sharper Image Corp. were among the disappointments. Bright spots were wholesale club operator Costco Wholesale Corp. and Nordstrom Inc., both of which beat expectations.

The downbeat results from teen retailers — their second straight disappointing month — show that even younger shoppers, who had been splurging on pricey jeans and other fashions, are not spending as much of their discretionary income, analysts said.

The International Council of Shopping Centers-UBS sales tally of 60 retailers rose a slim 1.9 percent in March, less than the 3.0 percent gain originally expected for the month. It marked the weakest sales growth since November 2004, when the tally rose 1.8 percent.

The tally is based on same-store sales, or sales at stores opened at least a year. Same-store sales are considered the best indicator of a retailer’s performance.

The tempered sales reports followed a disappointing February, when the ICSC tally posted a 3.2 percent gain. January was a robust month as consumers, armed with holiday gift cards, shopped enthusiastically, resulting in a 5.0 percent increase.

Although temporary factors such as the lateness of Easter and cool weather helped limit spending, analysts also said consumers are contending with higher interest rates, which makes financing debt more expensive, and higher gasoline prices. A cooling housing market also has slowed the trend of people taking cash out of their appreciated homes through refinancings and home-equity loans.

Still, analysts say retailers were partly to blame for what is winding up to be a lackluster spring selling season. Stores are showing a great deal of beige and white clothing, a big difference from the bright colors dominating the selling floors a year ago. Teen retailers are doing well with cargo capris, but there isn’t one fashion item that is exciting older consumers.

“There’s not a lot of compelling fashion,” said John Morris, retail analyst at Harris Nesbitt.

Wal-Mart posted a slim 1.4 percent gain in same-store sales, in line with the 1.2 percent estimate from analysts surveyed by Thomson Financial.

Wal-Mart blamed a late Easter, which falls on April 16 and is three weeks later than last year, for depressing results. The retailer said it expects same-store sales gains to improve to 4 percent to 6 percent in April.

Because of the calendar shift, retailers and analysts look at March and April results combined to assess sales trends.

Analysts estimate that the change in Easter depressed sales anywhere from 1 to 1.5 percentage points in March, while April results should be boosted by that amount.

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