Inside This Issue - News
Same-store sales in April are disappointing
May 14th, 2012
NEW YORK – April sales were weaker than expected, as cooler weather and renewed worries about the health of the economy caused shoppers to rein in their spending.
Spending in April was also hurt by an earlier Easter this year, which shifted some pre-holiday spending into March.
The 19 chains tracked by Thomson Reuters reported a 0.8% increase in same-store sales, falling short of the 1.5% increase analysts were expecting.
Not everyone sees the weakness in April sales as a cause for concern. "While April results were disappointing, the noise from the Easter calendar shift and pull forward in demand from favorable weather in February and March make the results less impactful on a stand-alone basis," Deutsche Bank analyst Charles Grom contends.
Grom predicts that comparable-store gains should bounce back in May, in part because of easier comparisons with May 2011, but also because of warmer weather and easing gasoline prices.
Target Corp. was among the retailers that missed analysts’ projections with its April sales. Target’s same-store sales advanced 1.1% for the month; the consensus forecast had been 2.9%.
"Because of the Easter shift, the company was lapping a difficult 13.1% comp from last April, but we still expected a slightly better result, given recent momentum in the business," says William Blair & Co. analyst Mark Miller. "Overall, however, the first quarter comp of 5.3% was the best quarterly comp performance in more than six years."
Target’s total sales for the month rose 2.1% to $4.98 billion.
Costco Wholesale Corp. reported net sales of $7.25 billion for the four weeks ended April 29, an increase of 7% over the comparable period the year before. Same-store sales increased by 4%, or 5% if the effect of gasoline prices and currency exchange rates are excluded. Analysts were expecting same-store sales to increase by 5.1%.
Fred’s Inc. reported that its total sales for the month increased 4% to $147.6 million. Comparable-store sales for the month declined 0.3% (in contrast to an increase of 1.8% in the corresponding period last year).
"Comparable-store sales for the month were at the low end of the range we anticipated," said Fred’s chief executive officer Bruce Efird. "But the 4% increase in total sales in April was at the midpoint, as new stores achieved a higher-than-expected sales performance.
"Our comparable stores reflected the impact of an earlier Easter holiday this year, a sharp drop-off in tobacco sales and the continued shift of brand to generic drugs in our pharmacy department.”
Duckwall-ALCO Stores Inc. reported that its sales from continuing operations in April rose 4% to $36.2 million. Same-store sales, excluding fuel, increased by 2.5%.
Rite Aid Corp., meanwhile, reported a 2.9% same-store sales gain for April. Front-end same-store sales increased 2.7%, while pharmacy same-store sales — hurt somewhat by the effect of new generic drug introductions — advanced by 3%.
Walgreen Co. posted total sales of $5.78 billion in April, down 3.7% from last year. Comparable-stores sales for the total store in April were down 6.4%, which was below analysts’ projections of a 5.1% decline.
Total front-end sales decreased 0.5% compared with April 2011, while comparable-store front-end sales decreased 2.2%. Comparable pharmacy sales were down by 8.9%. Comparable-store pharmacy sales were hurt by 3.4 percentage points due to generic drug introductions; by 0.5 of a percentage point due to lower incidence of cough, cold and flu; and by 10.7 percentage points because Walgreens was no longer part of the Express Scripts network.