After a disappointing sales performance in March, it remains
to be seen how things are shaping up for retailers in April.
Higher Social Security Payroll taxes, unexpected cold weather and
political gridlock and brinkmanship dampened the mood of shoppers
in March. Retail sales fell 0.4% last month, the biggest drop
since June last year, according to the U.S. Department of
This is the second time in three months that retail sales have
tumbled. The figure had fallen 0.1% in Jan 2013 but improved 1%
in February. A sluggish recovery in the labor market is also
cited as one of the factors hurting consumers' enthusiasm. The
data from Labor Department suggested that the economy infused
88,000 jobs in March, far less than the average 220,000 jobs
added in the prior four months.
As a whole, Mar 2013 was tough for most retailers, who
witnessed sluggish comparable-store sales. The retail chains like
The Cato Corporation
The TJX Companies, Inc.
) witnessed comps decline of 11%, 1% and 2%, respectively.
) posted flat comps, while
) comps fell 3%.
However, a few retail chains were able to navigate through
this challenging economy. Among these,
Costco Wholesale Corp
Limited Brands Inc.
Ross Stores Inc.
) reported comparable-store sales growth of 4%, 3% and 2%,
But now, the biggest question is whether April holds promises
for retailers, after the March debacle. We will try to analyze
this from an overall economic perspective.
Higher taxes, weak job prospects and lower discretionary
spending could mark soft sales for April. Moreover, a tightening
fiscal policy is hampering consumer confidence. A preliminary
reading by Thompson Reuters and the University of Michigan
revealed that consumer sentiment fell sharply to 72.3 in April
from 78.6 in March, and reached the lowest level since Jul
To insulate themselves from these hurdles, retailers might go
for heavy discounting to attract consumers and clear their
inventories but this could dent their margins.
On the other hand, some believe that improvement in weather
conditions, the calendar shift in Easter to March this year from
April last year, and the expected fall in gasoline prices along
with tax refunds that are gradually making their way in, could
lead to a rise in discretionary spending and in turn better sales
But with economy yet to show full recovery and the
unemployment rate hovering around 7.6%, April might see cautious
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