- The Washington Times - Thursday, March 8, 2007

NEW YORK (AP) — The nation’s retailers saw a slow start to the spring season as unseasonably cold weather in February chilled demand for lightweight apparel and left merchants with disappointing sales. The slowing economy, particularly the weakening housing market, could challenge shoppers in the months ahead.

As merchants reported monthly sales results early yesterday, those with disappointing results included Wal-Mart Stores, Costco Wholesale and plenty of apparel stores such as Abercrombie & Fitch. High-end stores such as Nordstrom Inc. continued their winning streak, underscoring that well-heeled consumers don’t buy out of need.

“Cooler weather clearly dampened spring apparel sales,” said Ken Perkins, president of RetailMetrics LLC, a research company in Swampscott, Mass. “Customers were not shopping for capri pants.” He noted that winter storms in the Midwest and on the East Coast hurt Valentine’s Day sales.

But Mr. Perkins also said major concerns for consumer spending in the months ahead are the defaults and delinquencies in the mortgage industry. That, coupled with a decline in mortgage equity withdrawals that give consumers extra cash, could curtail spending.

The International Council of Shopping Centers-UBS sales tally for February rose a modest 2.4 percent, below the projected range of 2.5 percent to 3 percent. The results are based on sales at stores open at least a year, known as same-store sales and considered a good gauge of a retailer’s health.

The muted sales reports followed a rebound in January, when the late arrival of winter weather helped clear out items such as boots and coats. But that meant there was little for shoppers to buy last month, as they had little interest in spring wear.

There remains the specter of higher gasoline prices, which jumped above $3 a gallon in California and Hawaii and might reach that level in other parts of the country when the summer driving season approaches.

One bright spot is the healthy job market. The Labor Department yesterday reported that the number of laid-off workers filing claims for unemployment benefits declined by 10,000 last week to 328,000 last week, the lowest level in a month.

Wal-Mart, dragged down by languishing sales at its namesake discount stores, reported a slim 0.9 percent gain in same-store sales, below estimates.

Costco reported a 4 percent increase in same-store sales, below the 5.1 percent forecast.

Meanwhile, high-end stores continued to shine. Nordstrom reported a 9.1 percent increase in same-store sales in February, beating the 5.7 percent estimate.

Saks Inc., which operates Saks Fifth Avenue, said its same-store sales surged 24.7 percent, helped by higher sales of full-price merchandise and an end-of-season consolidation sale in certain flagship stores. Analysts expected 6.4 percent.

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