Retail sales may climb as temperatures rise

By Justin Grant

NEW YORK (Reuters) - Retail sales in April are expected to show a slight improvement from an abysmal March as warmer weather drove demand for spring merchandise, but Wall Street still expects signs of weakness at department stores.

Many retailers have been struggling in recent months as cash-strapped consumers pull back on nonessential items like furniture, clothes and jewelry due to soaring food and gasoline prices.

By contrast, analysts expect chains that sell necessities like food and milk at discount prices -- Wal-Mart Stores Inc (WMT.N: Quote, Profile, Research, Stock Buzz), Costco Wholesale Corp (COST.O: Quote, Profile, Research, Stock Buzz) and Target Corp (TGT.N: Quote, Profile, Research, Stock Buzz) -- to be among the standouts on Thursday when many companies report monthly same-store sales, a key measure of retail health.

"The consumer is focused on buying what they have to have, not what they want to have," said Howard Davidowitz, chairman of Davidowitz & Associates, a New York-based retail consulting firm.

"You'll see softness in almost all the major department stores, such as J.C. Penney Co (JCP.N: Quote, Profile, Research, Stock Buzz), Kohl's Corp (KSS.N: Quote, Profile, Research, Stock Buzz), Macy's Inc (M.N: Quote, Profile, Research, Stock Buzz), Sears Holdings Corp (SHLD.O: Quote, Profile, Research, Stock Buzz) and Dillard's Inc (DDS.N: Quote, Profile, Research, Stock Buzz)," Davidowitz said.

March was the worst month for U.S. retailers in 13 years due to the earliest Easter since 1913, and as cold weather curbed demand for spring clothing. Easter fell on March 23.

While overall Easter sales help retailers, the holiday -- which usually falls in April -- takes away one shopping day and reduces total sales for the month.

"Easter fell three weeks earlier this year, so that's a definite benefit" for April, said Wedbush Morgan Securities analyst Joan Storms. "The other thing is the weather finally broke. It warmed up across most of the country, so seasonal items -- whether it's spring apparel or lawn (and) garden -- those sales should spike."