March '07 Sales Surge

Warm weather and the Easter holiday made retail sales skyrocket in March.

The month’s sales were so good that even long-suffering companies such as The Gap and Hot Topic reported positive same-store sales— 6 percent and 3.4 percent, respectively— after spending the past two years posting declines in their comparable-store sales.

March’s performance beat the estimates for the month’s sales growth, which were 4 to 5 percent, according to the New York–based International Council of Shopping Centers. Instead, March’s retail sales blossomed to a 5.9 percent growth, according to the ICSC’s index of 53 retailers.

Luxury stores reported the month’s best performances, with a growth rate of more than 12.7 percent. Apparel chain stores enjoyed a great month after reporting a 7 percent increase in sales. However, the good times may not last, said Michael Niemira, the ICSC’s chief economist.

“For April, we expect comp-store sales to be flat to up 1 percent, on a year-over-year comparison,” he said.

The expected reversal might be explained by basic physics. Every action must have a reaction, said Jeffrey Van Sinderen, a retail analyst for Los Angeles–- based-financial ser vices firm B. Riley & Co.

March’s retail sales increased because consumers were buying new clothes for the Easter holiday, which fell on April 8—a week earlier than the previous year. Along with Easter, many other reasons to shop, such as spring break, have already passed, and the consumer has fewer calendar reasons to walk into a store, Van Sinderen said.

“Retailers will see a significant swing from March performance. You’re not going to see, for example, Pacific Sunwear increase 14.1 percent in April,” Van Sinderen said.

Most retailers are expected to return to their status quo performance after the March surge. Yet if a retailer was improving, it may enjoy a strong performance in April.

That might be the case for Pac Sun, according to retail analyst Liz Pierce, who is with Roth Capital Partners, based in Newport Beach, Calif.

In a research note dated April 12, Pierce wrote that the surf-and-skate–friendly retailer should experience better business in April because of recent improvements in the assortments of girls and juniors merchandise.

Andrew Asch