American Shoppers Stayed Home in April

An early Easter combined with bad weather resulted in the nation's largest retailers laying an egg when it came to April sales.

And as the housing market continues to weaken and gasoline prices rise to near record highs, the outlook for improved sales does not look good for the months ahead.

The UBS-International Council of Shopping Centers tally of same-store sales for 51 retailers fell by an overall rate of 2.3 percent in April. That represents the weakest monthly growth since the survey began in 1970.

Michael Niemira, the ICSC's chief economist, described the month as an "ugly performance."

The nation's largest retailer, Wal-Mart, reported a 3.5 percent drop in sales April 1. Last November, the company reported a 0.1 percent decline in sales, its first drop in sales in nearly a decade.

April's decline was the the largest since 1979, when Wal-Mart began reporting same-store sales results.

Target also reported a drop of 6.1 percent in same-store sales, or sales in stores opened for more than a year, the traditional measure of sales growth.

Department stores, which had seen stronger sales during the holidays, were largely off in April, too. Federated, owner of Macy's and Bloomingdale's, saw sales drop 2.2 percent. J.C. Penney dropped 4.7 percent and Kohl's dropped 10.5 percent.

Specialty stores also suffered in April. The Gap was down 16 percent, Abercrombie & Fitch dropped 15 percent and same-store sales at Chico's dropped more than 7 percent.

A significant reason was the unusually early Easter holiday. That inflated sales in March and pushed down sales in April.

In addition, April showers kept shoppers at home. Cold rain and snow during the first two weeks of the month made April 2007 the coldest April on record since 1997, according to Weather Trends International. Retail analysts at Bear Stearns pointed out that mall traffic was down 10 percent for the month.

But while analysts and economists expected weak sales in April, the drop was larger than many had anticipated, and for the year so far, consumers appear to be reining in their spending at the mall.

From February to April, the ICSC reported that same-store sales rose 2 percent, half of the 4 percent growth during the same period last year.

"What has happened since January is an unexpected jump in gasoline prices that has, I think, weakened spending temporarily in the spring," said Peter Kretzmer, senior economist at Bank of America Securities.

Wal-Mart said in its statement announcing April sales that its monthly survey shoppers found they were worried about higher gasoline prices.

"For March, the latest data available, the top three concerns among discount store consumers, as well as regular Wal-Mart shoppers, were money/income/finances, the cost of living and gas prices," the statement said.

And along with higher prices at the pump has been the impact of a cooling housing market, which has led a slowdown in overall economic growth.

Now, as people have less discretionary income available, the worry is that consumer spending, which makes up nearly two-thirds of the nation's economy, will slow as well.

"Expenditures on consumer electronics and apparel items will, I think, continue to be under pressure for the very near term," Niemira said.

He added that the nation's retailers are going through a tough patch now that will probably last over the next couple of months.

But one sector keeps on growing -- luxury retailers -- whose shoppers are often not as affected by higher gasoline prices. As in previous months, these stores have seen their sales increase. Saks reported 11.7 percent growth, and Nordstrom reported an increase of 3.1 percent in same-store sales.