April turns weak for retailers; apparel bucks trend

(Reuters) - Several large U.S. retailers, including Target Corp , Macy's Inc and Gap Inc , missed sales estimates for April, as cooler weather chilled some of the enthusiasm consumers showed earlier this year.

An earlier Easter also hurt April sales by shifting demand into March.

But several retailers, including Gap and Aeropostale Inc , estimated quarterly earnings above analysts' expectations as they were able to rein in discounts and keep inventory under control.

"It is possible to increase profit and margins sometimes at the expense of sales, and that is not always visible in monthly sales numbers," said Joel Bines, managing director of AlixPartners' retail practice.

The Thomson Reuters same-store sales index showed a rise of 0.8 percent for April sales at stores open at least a year, short of analysts' estimates for an increase of 1.5 percent. Sales in March had risen 4.3 percent.

The Standard & Poor's Retail Index was down 0.6 percent in early trading, while the broad S&P 500 stock index was nearly unchanged. Shares of Macy's and Target both fell about 2 percent.

March results benefited because of an earlier Easter -- April 8 this year, compared with April 24 in 2011. It was also the warmest March in more than 50 years, which helped spur sales of spring clothing.

Macy's April same-store sales rose 1.2 percent, below the 1.9 percent increase analysts were expecting. The department store chain blamed the earlier Easter and a later Mother's Day -- May 13 -- for the slower growth.

Target posted a 1.1 percent rise, missing the analysts' average forecast of 2.8 percent. The discount chain said growth in average transaction size offset a slight decline in the number of comparable-store transactions.

Gap said same-store sales had fallen 2 percent, which was worse than the 0.8 percent drop analysts were expecting. Still, the clothing retailer's profit view for the first quarter ended on April 28 was above estimates.

Fellow clothing retailers Aeropostale Inc and American Eagle Outfitters Inc also raised their earnings estimates for the latest quarter.

Apparel retailers have finally started selling closer to full price after years of discounting. Bines said that while tempered discounting might have hurt Gap's April sales, it helped margins.

Victoria's Secret parent Limited Brands Inc posted a 6 percent rise in same-store sales, beating estimates. ID:ASA043YY]

Teen clothing retailer Zumiez Inc also surpassed estimates with a 10.1 percent rise.

Outside of the apparel market, Costco Wholesale Corp missed Wall Street estimates for the second month in a row, indicating competition with other big-box retailers hurt the biggest U.S. warehouse club operator's performance.

Its same-store sales rose 4 percent, while analysts were expecting a 5.1 percent increase, according to Thomson Reuters Data.

"It didn't seem to receive the traffic lift one would expect operating gas stations that sell cheaper petrol and stores that undercut grocery chains," Brian Sozzi, chief equities analyst of NBG Productions, said in a note.

Sozzi said Costco, which competes with Wal-Mart Stores Inc's Sam's Club and BJ's Wholesale, has been "a bit more aggressive in terms of price to drive traffic." Its March results indicated consumers could be finding a better experience and prices elsewhere, he added.

(Reporting by Nivedita Bhattacharjee and Jessica Wohl in Chicago, Phil Wahba in New York; Editing by Lisa Von Ahn)