Between the arrival of warmer spring weather and a later-than-usual Easter, retailers registered a much bigger April sales bounce, with the Gap’s Old Navy brand turning in a dazzling performance. While its overall sales gained 9%, the San Francisco-based company says sales shot up 18% -- a gain analysts attributed in part to its new ad campaign, starring comedian Amy Poehler.
The International Council of Shopping Centers says its index of U.S. chain-store sales grew by 6% in April compared with last year. “After sluggish demand earlier in the year due to adverse weather, consumers increased their spending significantly in April,” says Michael P. Niemira, its chief economist, in a release. Even accounting for the calendar shift created by the late timing of Easter this year, which made for weaker March results, “the April pace was very strong, likely reflecting some pent-up demand being unleashed.”
At Gap, experts had predicted essentially flat results. Its Banana Republic unit also did well, with sales climbing 9%. As a result, it increased its earnings forecast for the year.
That sparked plenty of attention from observers. “While Easter clearly helped the sales results, Old Navy is firing on all cylinders and Banana Republic appears to be turning the corner as well,” write Sterne Agee analysts Ike Boruchow and Tom Nikic in its latest analysis of the San Francisco-based retailer. “Gap may struggle until the fall due to assortment issues, but all told, it’s on the right track.”
Besides the Poehler campaign, the report also singled out Old Navy’s in-store “Show me the bunny” promotion as particularly effective.
Other stores that did well include Costco, with a 5% gain in U.S. sales and a 7% gain in international units.
More reasons for retailers to feel upbeat? MasterCard’s latest Spending Pulse also shows a rebound in consumer spending after several months in the doldrums. Its index shows 4.4% year-over-year growth in April, up from 2.2% in March, and the strongest growth since December of last year.
“April’s gains do not make up for last quarter’s sluggishness,” writes Sarah Quinlan, SVP/market insights, “but we’ve been saying that warmer weather would bring improved sales, and with April’s spring temperatures, every industry sector seems to have shrugged off the weakness of earlier this year and made a strong comeback.”