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Shoppers’ spending surprisingly strong in March

NEW YORK — Shoppers shrugged off higher gas prices and cool temperatures to give retailers a surprisingly strong March.

The retail revenue figures released Thursday extend the streak of solid spending from late last year and indicate that recent job growth is tempering worries about higher pump prices.

A broad range of stores from Costco Wholesale Corp. to Victoria’s Secret parent company Limited Brands Inc. reported revenue gains that handily beat Wall Street expectations. Target Corp. reported a smaller decline than Wall Street expected.

“Neither the lack of the Easter Bunny, nor cool temperatures or spiking gas prices could keep consumers at bay,” said Ken Perkins, president of RetailMetrics LLC, a research firm. “There is still a significant amount of pent-up demand. I think the job recovery is catching on.”

Gap Inc. was one of the few big losers, reporting a decline that was worse than expected and warning of disappointing earnings. Japan’s earthquake, tsunami and nuclear crisis also took a toll on Gap, which operates 150 stores there, the retailer said.

The figures are based on revenue at stores open at least a year and are considered a key indicator of a retailer’s health.

The results are particularly encouraging because March 2010 spending was boosted by an early Easter. This year, Easter falls on April 24, three weeks later than last year. That puts holiday spending into April and depressed Marches results anywhere from 3 to 5 percentage points.

Many retailers were expected to report declines. Analysts say combining March and April figures gives the best read on consumer spending.

According to a preliminary count by Thomson Reuters, 11 retailers beat expectations, while four missed.

On March 1, national average for a gallon of unleaded regular was $3.375. At end of month it was $3.606, according to AAA, Wright Express and Oil Price Information Service.

Many other prices also are increasing. Food prices are expected to rise 3 percent to 4 percent this year, with the steepest hikes in dairy, meat and coffee. Clothing sellers are raising prices to offset soaring costs for labor in China and for raw materials like cotton.

Consumers surveyed in March for the Conference Board’s Consumer Confidence Index voiced concerns about inflation and stagnant incomes. The index fell sharply from a three-year high in February, reversing five straight months of improvement.

But analysts say that March’s revenue results shows that shoppers’ focused on the solid gains in job growth, which gained momentum last month. Companies added workers at the fastest two-month pace since before the recession began.

Costco said Thursday that revenue at stores open at least a year, excluding membership fees, climbed 13 percent last month, handily beating Wall Street expectations. Analysts expected a 7.4 percent increase.

Taking out rising gas prices and strengthening foreign currencies, sales at stores open at least a year climbed 8 percent.

Target posted a 5.5 percent drop in March, but the decline was smaller than the 6.4 percent expected.

The discount chain says groceries were its best-selling category. Clothing also sold well, particularly workout clothes. Weaker categories included movies, books and home products. The later Easter particularly hurt sales of candy, clothing and toys.

The discounter expects the figure to rise in the mid-teens percentage range in April with the Easter boost.

Macy’s Inc. reported a 0.9 percent increase, better than expected, as shoppers picked up new spring clothing.

“March sales exceeded our expectations and demonstrated that our spring fashion assortments are hitting the mark with customers,” CEO Terry J. Lundgren said in a statement.

Limited reported a robust 14 percent gain, sharply higher than analysts expected, driven by strength at its Victoria’s Secret stores.

The company said a later Easter this year hurt revenue in stores open at least a year by 3 to 5 percentage points. Analysts polled by Thomson Reuters expected a much smaller 1.5 percent gain.