Costco Misses Sales Forecast as L Brands Tops Expectations

Thursday, 11 Apr 2013 06:54 AM

 

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Costco Wholesale Corp. reported a slightly smaller-than-expected jump in same-store sales in March on Thursday, hurt by weak international results and lower gas prices, while Victoria's Secret parent L Brands Inc. reported better-than-expected sales at all of its chains.

Costco fared better in the United States, where sales at stores open at least a year rose 5 percent, largely in line with expectations. Small appliances, jewelry and fresh food showed some of the biggest gains.

L Brands saw continued improvement at its La Senza chain as well as an unexpected rise in same-store sales at Bath & Body Works. Companywide, same-store sales rose 3 percent, while Wall Street expected them to be flat, according to Thomson Reuters.

Analysts expect 13 top U.S. retailers, including T.J. Maxx parent TJX Cos Inc. and Gap Inc., to post a 1.8 percent rise in same-store sales for March, according to Thomson Reuters, down from a rise of 2.9 percent in March 2012. They will report later Thursday.

There have been concerns a tightening job market could hurt consumer spending. The U.S. labor market recovery showed signs of losing momentum in March as employers hired at the weakest pace in nine months.

But consumers seemed not to notice. A survey by Thomson Reuters/University of Michigan found U.S. consumer sentiment jumped in the second half of March by a record amount on what was thought to be an improving job market.

Retailers Zumiez Inc. and Buckle Inc., which cater to younger shoppers who are particularly exposed to the vagaries of the economy, both reported better-than-expected numbers.

Still, retailers were hampered by an unusually cold start to March, prompting many shoppers to put off buying warmer-weather clothing.

"We believe retailers have struggled to convert customers to full spring buying mode," Janney Capital Markets analyst Adrienne Tennant wrote in a note this week.

The earlier timing of the Easter holiday this year is also likely to have hurt March numbers, but the business will show up in the April results.

Low-priced specialty clothing chain Cato Corp. blamed both those factors for an 11 percent drop in same-store sales.

Last week, Rite Aid Corp. reported overall same-store sales fell 2 percent, but sales of general merchandise, a closer proxy to consumer discretionary spending, rose 3.8 percent.

Larger rival Walgreen Co. reported a modest 0.7 percent gain in same-store sales in March, with a better showing for its front-of-the-store merchandise, which beat expectations.

Excluding Walgreen and Rite Aid Corp., whose results are heavily skewed by prescriptions sales, Wall Street expects a jump of 2.2 percent in the same-store sales index, down from a rise of 7.1 percent last year.

© 2014 Thomson/Reuters. All rights reserved.

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