Retailers post dismal sales for March

NEW YORK — With little money left after buying food and fuel, American shoppers handed most retailers their most dismal March in 13 years.

As retailers reported sales results on Thursday, Wal-Mart Stores Inc. and Costco Wholesale Corp. were among the few winners, as shoppers stuck to basics. Wal-Mart raised its earnings outlook, noting that better inventory control helped to limit markdowns on merchandise. It also said that April sales should top prior expectations.

But March proved to be bleak for most others, including J.C. Penney Co., Gap Inc., and Limited Brands Inc. All of them reported sharp drops in sales. Even high-end department stores like Saks Inc., languished; Saks noted that jewelry and designer women's apparel were among the weakest areas.

Merchants faced a slew of obstacles to improving sales: record gas prices, rising food costs, a weaker job market, slumping home prices and an early, frigid Easter. The weather may be warming now, but the rest of those problems aren't likely to dissipate soon.

"Consumers are buying what they need," said Jennifer Black, president of Jennifer Black & Associates, an equity research company in Lake Oswego, Ore. For everything else, shoppers are being pickier and focusing on discounters, she said.

According to a preliminary tally by UBS-International Council of Shopping Centers, sales slid 0.5 percent versus its original estimate of 1-percent growth. The results, based on same-store sales or sales at stores opened at least a year, were the weakest since March 1995, when the industry registered a decline of 0.8 percent.

The retail industry already had been bracing for a weak March because Easter landed two weeks earlier than last year, on March 23, when winter weather still gripped most of the nation. It was the earliest in 95 years. Retailers also had one less shopping day in March compared to a year ago.

A deteriorating economy, soaring food and gas prices, limited credit and slumping home prices shook shoppers further. The Conference Board, a business-backed group, said late last month that consumers' outlook for the economy was the gloomiest in 35 years.

Food prices have been soaring. In February, the price of cereal and bakery products shot up by 1.8 percent, the largest monthly increase since January 1975, according to the Labor Department. A gallon of milk is now close to $4; a dozen eggs more than $2. The higher costs partly reflect rising energy prices, which increase transportation costs.