Shoppers along Colorado Boulevard in Pasadena this week said they were… (Anne Cusack, Los Angeles…)
Shoppers hit the malls in March and provided a boost for the nation's retailers, a sign of a recovering consumer economy and job market — despite the pinch of rising gasoline prices.
Major chain stores posted a healthy 4.3% sales increase in March compared with the same month a year earlier, beating analysts' expectations of a more modest 3.5% rise, according to Thomson Reuters' tally of 20 retailers.
"We are seeing more consistent performance of U.S. jobs and more stabilization of wages," said Laura Gurski, global head of the retail practice at consulting firm A.T. Kearney. "The average American consumer right now feels better about where they are and are spending a bit more money."
Strong retail sales are just one sign of an economy on the mend. Stock market indexes are coming off their best first quarter since 1998. The number of people applying for jobless benefits dropped last week to the lowest level since April 2008, the Labor Department said Thursday, a promising sign ahead of national unemployment numbers for March to be released Friday.
Along Colorado Boulevard in Pasadena on Wednesday, shoppers said they were in the mood to refresh their wardrobes with some bright colors, floral patterns and other spring fashions beckoning from store windows.
"I've been shopping for the past few days and looking for heels to wear to church for Easter," said Patrice Harris, 36, a high school teacher who had just spent $100 on a pair of teal leather sandals. "I've held back the last few years, but I'm working hard and it's time for some new things."
Shoppers who would normally wait longer for spring items are flocking to stores because of the unseasonably warm weather in much of the country, analysts said. An earlier Easter this year — April 8 versus April 24 last year — has also given retailers an extra shot in the arm for March.
"There has been a pull forward of early spring spending that might normally take place in April," said Ken Perkins, a retail expert at Retail Metrics Inc. "That means April will be weak. But beyond that, there are good signs going forward."
Top performers were a mixture of high-end and moderately priced chains. Teen action-sports chain Zumiez Inc. led the way with a 14.1% bump. Off-price retailers Ross Stores Inc. and TJX Cos. both reported a strong 10% increase. Gap Inc., which has been struggling in the last year, beat expectations with a robust 8% jump.
Results are based on sales at stores open at least a year, known as same-store sales and considered an important measure of a retailer's health because it excludes the effect of stores' openings and closings.
All told, about 59% of retailers beat expectations, according to Thomson Reuters.
Industry watchers say the gap between low-income and more prosperous shoppers continues to shape the retail industry. Wealthier consumers, buoyed by the stock market rally, have flocked back to luxury chains and high-end department stores, while people living paycheck to paycheck continue to be squeezed by soaring gas prices.
"Middle- and upper-income shoppers feel better about spending," Perkins said. "But moderate consumers have not been feeling the benefit of the slow recovery. Their wage gains have been minimal, if at all."
Nordstrom Inc. saw sales jump 8.6%, while Macy's Inc., which has soared after implementing a localization initiative, reported a 7.3% rise.
Retailers are showing their mixed success with investors as well. As of Thursday, Macy's shares have jumped 66% year over year and Nordstrom shares have risen 23%.
In contrast, at moderately priced J.C. Penney Co., shares are down 27% year over year, and the retailer said Thursday that it would cut about 900 jobs, including 600 at headquarters. After a poor holiday season, the company rolled out a new pricing strategy this year and said it would no longer report monthly same-store sales.
Discount giant Wal-Mart Stores Inc., which also does not report monthly figures, has seen its core customers trade down to dollar stores. After nine straight quarters of sales declines, the retailer began a turnaround last year by reemphasizing rock-bottom prices.
"Some retailers like Wal-Mart have said that gas prices had an impact" on their shoppers, said Judith Russell, editor of the Robin Report, a retail industry publication. "Unless you're a luxury store or an up-and-coming brand, retailers find they still have to be promotional and offer sales."
Analysts predict that healthy levels of consumer spending will continue into the summer, but some worry that high gas prices may burn away extra cash that people might otherwise have for shopping.
"Gas is one thing to keep an eye on during the back-to-school season," Gurski said. "If we feel an impact of gas, it will be closer to July or August."
But Perkins predicted that high gas prices wouldn't deter shoppers from updating their spring wardrobes.
"It's not the same shock as last year," Perkins said. "If prices stay around four bucks, consumers will be able to say 'All right, I've been here before, I've already worked it into my budget.'"
Although she's graduating in May and worried about finding work, Lisette Mendez, 24, of El Monte was hunting for girlie fashions on Colorado Boulevard this week.
"More wedges, pink pants, dresses, more of everything," said Mendez, ticking off a mental shopping list. "I'm afraid that there aren't that many jobs out there, but I'm due for a pair of new shorts."