Cooler weather at the beginning and end of the month in the Northeast and Midwest cut down store traffic, according to a Lehman Brothers report authored by analyst Jeff Black. But those conditions were still better than the previous month, it said. "The erratic spring weather continues to play havoc sporadically, but overall, weather trends have been much more favorable."
Black predicts that American Eagle Outfitters and Ross Stores will both have strong months. He forecasts a 22% same-store sales jump for American Eagle because of its "vibrant colors and trend-right bohemian embellishments" and a 3% increase for Ross because "the company is benefiting from better product flow." Three chains that Black says will have negative same-store sales results are Ann Taylor, Gap and Limited.
Easter falling in March instead of April this year could negatively impact sales, says a Wachovia Capital Markets report. Higher gasoline prices might hurt the discount sector more than other chains, say the firm's retail analysts.
One retailer they expect will do well is Michael's Stores. "We believe the sector is experiencing increasing consumer demand, and it is under-stored." However, fabric-selling retail chains, such as Hancock Fabrics, are declining.
Christine Augustine, a Bear Stearns retail analyst, also points to cool weather as a possible sales hindrance to department stores and discounters. She expects Target to post sales at the low end of its 2% to 4% increase.
Additionally, she predicts that Kohl's and May Department stores could have the highest exposure to "basic seasonal apparel sales." Kohl's needs at least a 5% same-store sales jump to meet in Q1 earnings plan of $0.35 to $0.37 per share.
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