Retailers get Easter lift, but grim April looms

By Karen Jacobs

ATLANTA (Reuters) - U.S. retailers reported stronger-than-expected March sales on Thursday, helped by an early Easter holiday and pent-up demand from a cold February, but warned that April will probably be a crueler month.

Many chains, including retail leader Wal-Mart Stores Inc. (WMT.N: Quote, Profile, Research, Stock Buzz), said comparable-store sales results will suffer this month, and some noted continued softness in sales of home goods amid the weak housing market.

The Standard and Poor's retail index .RLX gained about one-half percent on the day, recouping earlier losses.

"The Easter shift showed a greater-than-typical gain in (March)," said Dana Telsey, founder of research firm Telsey Advisory Group. "The giveback will occur in April, and that's what to watch going forward."

Wal-Mart, the world's largest retailer, posted a better-than-expected 4 percent rise in March sales at U.S. stores open at least a year, above the 1.9 percent increase expected by analysts. Food and pharmacy sales were strong.

But the Bentonville, Arkansas, company said April sales would be flat to down 2 percent because of the earlier Easter, and it warned that meeting its quarterly profit forecast of 68 to 71 cents per share from continuing operations would be difficult.

"While the earnings guidance is still attainable, given the tough sales environment for the April period, it will be a challenge," Chief Financial Officer Tom Schoewe said in a statement.

Easter fell on April 8 this year, compared with April 16 in 2006, so sales of holiday-related items came largely in March.