Weak retail sales may spur more warnings

By Nicole Maestri

NEW YORK (Reuters) - If there was any question of how much an early Easter would hurt sales at already-struggling U.S. retailers, J.C. Penney Co Inc (JCP.N) gave a resounding answer last month with a quarterly profit warning.

The mid-tier department store operator, which counts half of American families as its customers, said earnings for its first quarter, which began on February 3, could miss initial forecasts by as much as 38 percent after sales through Easter came in well below expectations.

Investors are now bracing for more profit warnings on Thursday, when major U.S. retailers, including Wal-Mart Stores Inc (WMT.N), Gap Inc (GPS.N) and Kohl's Corp (KSS.N), report their final sales figures for March.

"We think it's possible that Nordstrom (JWN.N), Macy's (M.N) and Kohl's (KSS.N) could confess and warn of softer first-quarter earnings per share on Thursday," JPMorgan analyst Charles Grom wrote in a research note.

A Macy's spokesman declined to comment. The company no longer reports monthly sales and said in February that it would stop providing quarterly earnings forecasts.

Officials at Kohl's and Nordstrom were not immediately available for comment.

U.S shoppers have cut spending amid high gasoline prices, soaring food costs, dropping home values, a credit market crunch and a weakening job market.

But consumers have shown some willingness to keep on spending for special occasions, like the back-to-school season or Christmas.

NO EASTER BOON

Under other circumstances, Easter shopping could have fattened March sales results, spurring early consumer demand for spring merchandise and allowing retailers to sell items at full price.

But the holiday landed on March 23 this year -- two weeks earlier than a year ago -- and it came during a cold, damp month when many consumers were still wearing winter coats, sweaters and boots.

That gave cash-strapped shoppers an easy excuse to delay purchases of sandals, short-sleeved shirts and Easter dresses, and could mean retailers will ring up their worst March sales in 23 years, according to Weather Trends International.

"Retail sales will very likely come in well below expectations ... despite the earlier shift of Easter into March vs. April last year," Bill Kirk, chief executive of the research company, said in a statement.

Weather Trends said March was the snowiest in 12 years, the wettest in 10 years and the coldest in three years.

Retailers also face tough comparisons with last year's March results.