Retail spending continued to grow modestly in April as bad weather delayed spring shopping in much of the country and many consumers gravitated toward discount chains.
Thirteen major U.S. retailers reported a 3.8 percent increase in April sales at stores open at least a year, according to Thomson Reuters same-store sales index. That was less than the 4.3 percent increase Wall Street expected.
Wall Street got ahead of itself with upbeat expectations, said AlixPartners Managing Director Steve Nevill, noting that unemployment remained high and consumers were still worried about their own prospects.
"I still don't see us breaking out of this average performance until something big happens to lift consumer confidence," Nevill said.
L Brands Inc LTD.N, which operates Victoria's Secret and Bath & Body Works, said sales at all company stores open at least a year were up 2 percent last month. That was short of analysts' estimates, and its shares fell 1.1 percent.
Costco Wholesale Corp (COST.O) reported a 4 percent gain, slightly less than expected, in part because of sharply lower gas prices. Still, the warehouse club operator said sales of food and consumer electronics were good. Cost shares fell 0.5 percent
In contrast, so-called off-price chains TJX Cos Inc (TJX.N), which operates T.J. Maxx and Marshalls, and Ross Stores Inc (ROST.O) both easily beat Wall Street estimates, the latest evidence that shoppers remained price conscious despite gradual improvements in the job market.
Ross raised its first-quarter profit forecast after reporting a 7 percent gain in same-store sales. Larger rival TJX Cos said same-stores sales rose 8 percent last month. TJX Cos shares added 0.6 percent, while Ross was up 0.2 percent.
Gap Inc (GPS.N) reported a company-wide 7 percent gain, led by a big surge at its low-priced Old Navy chain, and it gave a current-profit forecast that was also above Wall Street expectations, sending shares up 7.2 percent in after-hours trading.
Because of the timing of Easter, March sales numbers were artificially low, while April got a boost. Taken together, retail spending grew about 2 percent, roughly in line with trends in the last two years, said Michael Niemira, chief economist of the International Council of Shopping Centers.
Spending is not expected to rise much faster than that in the coming months as consumers wrestle with a variety of worries, including the U.S. economy, Europe's economic problems, the debt debate in Washington and employment.
The ICSC expects same-store sales to increase 2 percent to 3 percent this month.
Excluding drug store chains Walgreen Co WAG.N and Rite Aid Corp (RAD.N), whose business is very dependent on prescriptions rather than items shoppers can do without at least temporarily, the same-store sales index was up 5 percent, a hair above the 4.9 percent estimate.
The S&P Retail Index .SPXRT closed up 0.1 percent.
LOTS OF DISCOUNTING
With the weather cool in much of the country in April, many shoppers' delayed purchases of spring clothing.
Janney Capital Markets analyst Adrienne Tennant said in a note this week that retailers were more aggressive in offering discounts in April, but things eased at the end of the month, suggesting stores had not over-ordered and making it likely they would avoid panicked markdowns.
Graphic: Several large chains miss sales estimates
Retailers that don't report monthly sales posted disappointing numbers. Ann Inc (ANN.N), the parent of the Ann Taylor chain, and Wet Seal Inc WTSL.O each recorded declines in same-store sales for the first quarter.
Last week, Rite Aid said same-store sales fell 4 percent in April, largely as many lower-cost generic drugs came to market in the last year. Larger rival Walgreen Co reported a modest 1.2 percent rise, hurt by a drop in sales of general merchandise.
Others did manage to buck the trend. Teen retailers The Buckle Inc (BKE.N) and Zumiez Inc (ZUMZ.O) reported much better-than-expected April sales on Thursday, and American Apparel Inc (APP.A) had a 3 percent gain. Zumiez shares rose nearly 4 percent, while Buckle added 1.3 percent.
As previously announced, TJX and Ross will no longer report monthly sales after April. That will leave 11 U.S. chains reporting monthly sales, down from a peak of 68 in 2006. In the years since, big names such as Macy's Inc (M.N), Wal-Mart Stores Inc (WMT.N) and Best Buy Co Inc (BBY.N) have dropped out of the same-store sales index.
(Additional reporting by Jessica Wohl in Chicago; Editing by Maureen Bavdek and Jeffrey Benkoe)