A combination of warm weather and high demand for spring fashions boosted revenue for the month, but analysts say there’s much more than higher temperatures at play: Americans who cut back on spending in the slow economic recovery are encouraged by the improving job market.
“There’s a growing belief we reached bottom a while ago,” said Joel Bines, the managing director of the retail practice of AlixPartners “Rather than confidence that things have turned the corner, it’s confidence that things are unlikely to get worse from here.”
Even though only a handful of retailers report monthly figures, industry watchers say March figures are a reason to be optimistic. That’s because the numbers offer a snapshot of consumer spending, which accounts for more than 70 percent of all economic activity.
Overall, revenue at stores open at least one year – an indicator of a retailer’s health because it excludes results from stores that opened and closed during the year – rose 4.1 percent, according to a preliminary tally of 22 retailers by the International Council of Shopping Centers. That figure is within the range of the group’s March estimates, but several retailers from luxury chain Saks Inc. to food and fragrance retailer Limited Brands Inc., had monthly gains that beat their own expectations.
The strong sales reports were boosted by unseasonably mild weather and a flurry of positive economic news. The housing market had its best winter in five years. Consumer confidence was relatively flat in March, but near February’s 12-month high. And on Friday a government report on March job growth is expected to show the fourth consecutive month of strong hiring.
Clothing chains, in particularly, benefited from heavy demand for spring fashions, like brightly colored denim. While March revenue figures are encouraging, analysts caution that retailers should not count their chickens before they hatch.
After all, gas prices – hovering around $4 – continue to weigh on consumers.