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Alibis Abound as Comp-Store Sales in March Lay a Big Egg

War worries, wintry weather and the late Easter proved undefeatable foes for March same-store sales, which finished below year-ago levels.

Marcia Aaron, a specialty retail analyst with Pacific Growth Equities, noted the wide gulf separating the best-performing retailers, like Pacific Sunwear’s Demo division (up 35.1 percent), and the weakest, like Wet Seal (down 27.1 percent).

"The changes in where consumers are shopping depend on who improved their assortments," she said. "I don’t think consumers are shopping with a vengeance. We need to have things settled, like a strong economy, to return to robust results." She characterized results since July as "anemic."

On the other hand, Accenture’s Steve Skinner said the overall picture is not as bleak. "There was just so much noise out there" in March, he said. "The silver lining in this dark cloud will become more apparent as the noise of the war and higher oil prices begin to recede from the scene. Corporations will be able to make better decision and will unleash renewed investment in the marketplace."



SPECIALTY STORES

Gap Inc. in March managed a 9 percent comp increase, its sixth straight up month, as Old Navy advanced 17 percent and Gap 6 percent, more than covering Banana Republic’s 5 percent decline. "Overall merchandise margins improved over the prior year due to more regular-price selling and higher markdown margins," the company said on a prerecorded call.

Higher conversion rates and average retail tickets at both Gap and Old Navy helped compensate for declines in traffic.

At Limited Brands, comps fell 4 percent, reflecting the shift of sales into April, due to the later timing of Easter. All divisions saw comp declines, but only Express, down 3 percent, exceeded expectations. Women’s sales were above expectations, due to additional markdowns.

Limited comps were down 5 percent, while those at Victoria’s Secret and Bath & Body Works fell 2 and 10 percent, respectively.

Continuing to ride the wave of strong sales, Pacific Sunwear of California said comps rose 9.5 percent in March with PacSun stores up 6.8 percent and Demo up 35.1 percent. The firm raised its first-quarter earnings expectations to 14 cents a diluted share, above the most recent consensus estimate of 12 cents. Female apparel and accessories comped up at a double-digit pace and footwear at a high-single-digit clip, while male apparel was down in the low-single digits.
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