Retailers report positive March sales

In this Tuesday, July 16, 2011 photo, an unidentified customer shops at Target Eagle Rock store in Los Angeles. Retailers from discounter Target Corp. to depart-store chain Macy's to outdoor sports retailer Zumiez reported better-than-expected sales during the month of March in the latest sign that Americans are feeling better about the economy. (AP Photo/Damian Dovarganes)

In this Tuesday, July 16, 2011 photo, an unidentified customer shops at Target Eagle Rock store in Los Angeles. Retailers from discounter Target Corp. to depart-store chain Macy's to outdoor sports retailer Zumiez reported better-than-expected sales during the month of March in the latest sign that Americans are feeling better about the economy. (AP Photo/Damian Dovarganes)

NEW YORK (AP) ? Retailers from discounter Target to department-store chain Macy's reported better-than-expected sales in March in the latest sign that Americans are feeling better about the economy.

A combination of warm weather and high demand for spring fashions boosted revenue for the month, but analysts say there's much more than higher temperatures at play: Americans who cut back on spending in the slow economic recovery are encouraged by the improving job market.

"There's a growing belief we reached bottom a while ago," said Joel Bines, managing director of the retail practice of AlixPartners "Rather than confidence that things have turned the corner, it's confidence that things are unlikely to get worse from here."

Even though only a handful of retailers report monthly figures, industry watchers say March figures are a reason to be optimistic. That's because the numbers offer a snapshot of consumer spending, which accounts for more than 70 percent of all economic activity.

Overall, revenue at stores open at least one year ? an indicator of a retailer's health because it excludes results from stores that opened and closed during the year ? rose 4.1 percent, according to a preliminary tally of 22 retailers by the International Council of Shopping Centers. That figure is within the range of the group's March estimates, but several retailers from luxury chain Saks Inc. to food and fragrance retailer Limited Brands Inc., had monthly gains that beat their own expectations.

The strong sales reports were boosted by unseasonably mild weather and a flurry of positive economic news. The housing market had its best winter in five years. Consumer confidence was relatively flat in March, but near February's 12-month high. And on Friday a government report on March job growth is expected to show the fourth straight month of strong hiring.

"Not only did we have nice weather, we've also taken a bit of a breather from the shocking economic news that we have had," said Laura Gurski, a partner and global head of A.T. Kearney's retail practice. "There's a calming down or feeling that the economy is settling in and starting to trend more positive from an American standpoint."

Jamie Whittier, an account manager from Connecticut, said the improving economy has made it easier for her to shop, including picking up a neon shift dress from Ann Taylor and bright pencil skirts from ASOS. "I definitely feel the economy is in better shape than last year," she said.

But for Sarah Lippman, the weather was the biggest motivator to shop. "I was ready for a wardrobe pick-me-up earlier than usual," said the 28-year-old from New York who recently bought a light leather jacket from Nordstrom.

Clothing chains, in particularly, benefited from heavy demand for spring fashions, like brightly colored denim. "Stores are showing something new and different from a fashion perspective and that's getting people into the stores," said Alison Levy, senior manager at consulting firm Kurt Salmon.

Macy's, which owns the Macy's and Bloomingdale's department chains, continued its strong monthly performance, reporting that revenue figure rose 7.3 percent, which beat analysts' expectations of a 4.8 percent rise.

As a result, the company raised its forecast for revenue in stores open at least one year during the combined March and April period, to a 4.3 to 4.5 percent rise, from prior guidance of 3 to 3.5 percent rise.

Even Gap Inc., which had been struggling recently, reported gains. In fact, the retailer, which owns Gap, Old Navy and Banana Republic, was one of the biggest success stories of the month. Revenue in stores open at least one year rose 8 percent, better than the 5.4 percent rise analysts polled by Thomson Reuters expected.

"We delivered solid sales performance in March and are pleased with customer response to product across all brands," said CEO Glenn Murphy.

While March revenue figures are encouraging, analysts caution that retailers should not count their eggs before they hatch.

After all, gas prices ? hovering around $4 ? continue to weigh on consumers and that hurts stores that cater to lower-end shoppers. Drug-store Walgreens and lower-end department stores Bon Ton Stores Inc. and SteinMart all both reported a decline in revenue in stores open at least one year in March.

Analysts also say a more accurate picture of Americans' spending will emerge after April since an earlier Easter holiday this year likely pushed some sales into March.

"April is a potentially difficult month," Perkins said. "Unseasonably warm weather pulled forward spring selling, and there aren't really any catalysts once Easter is over in the month. Everything hinges on the weather continuing to improve and that may not materialize."

Associated Press

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