Most retailers report weak March sales

NEW YORK -- With little money left after buying food and fuel, American shoppers handed most retailers their most dismal March in 13 years.

As retailers reported sales results Thursday, Wal-Mart Stores Inc. and Costco Wholesale Corp. were among the few winners, as shoppers stuck to basics. Wal-Mart raised its earnings outlook, noting better inventory control helped to limit markdowns on merchandise. It also said April sales should top prior expectations.

But March proved to be bleak for most others, including J.C. Penney Co., Gap Inc., and Limited Brands Inc. All of them reported sharp drops in sales. Even high-end department stores like Saks Inc. languished; Saks noted jewelry and designer women's apparel were among the weakest areas.

Merchants faced a slew of obstacles to improving sales: record gas prices, rising food costs, a weaker job market, slumping home prices and an early, frigid Easter. The weather may be warming now, but the rest of those problems aren't likely to dissipate soon.

"Consumers are buying what they need," said Jennifer Black, president of Jennifer Black & Associates, an equity research company in Lake Oswego, Ore. For everything else, shoppers are being pickier and focusing on discounters, she said.

According to a preliminary tally by UBS-International Council of Shopping Centers, sales slid 0.5 percent versus its original estimate of 1 percent growth. The results, based on sales at stores opened at least a year, were the weakest since March 1995, when the industry registered a decline of 0.8 percent.

The retail industry already had been bracing for a weak March because Easter landed two weeks earlier than last year, on March 23 when winter weather still gripped most of the country. It was the earliest in 95 years. Retailers also had one less shopping day in March compared to a year ago.

Wal-Mart was a bright spot. It reported a 0.7 percent gain in same-store sales, excluding sales results from fuel. That was slightly below the 1.0 percent estimate by analysts surveyed by Thomson Financial. Wal-Mart raised its first-quarter earnings outlook because of better inventory controls that yielded fewer markdowns and reduced store theft. The company also benefited from strong sales of groceries, video games and other electronics.

Rival Target Corp., which has been stumbling lately, posted a 4.4 percent decline in same-store sales. Analysts had expected a 2.7 percent decrease.

Costco posted a 7 percent gain in sales, higher than expected, with much of the gain coming from gasoline sales.