NEW YORK — Retailers from discounter Target to department store chain Macy's reported better-than-expected sales in March, in the latest sign that Americans are feeling better about the economy.
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, 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."
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.
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 straight month of strong hiring.
"Not only did we have nice weather, we've also taken a bit of a breather from the shocking economic news that we have had," said Laura Gurski, a partner and global head of A.T. Kearney's retail practice. "There's a calming down or feeling that the economy is settling in and starting to trend more positive from an American standpoint."
Clothing chains, in particular, benefited from heavy demand for spring fashions, like brightly colored denim. "Stores are showing something new and different from a fashion perspective and that's getting people into the stores," said Alison Levy, senior manager at consulting firm Kurt Salmon.
Macy's, which owns the Macy's and Bloomingdale's department chains, continued its strong monthly performance, reporting that revenue figure rose 7.3 percent, which beat analysts' expectations of a 4.8 percent rise.
Even Gap, which had been struggling recently, reported gains. In fact, the retailer, which owns Gap, Old Navy and Banana Republic, was one of the biggest success stories of the month. Revenue in stores open at least one year rose 8 percent, better than the 5.4 percent rise analysts polled by Thomson Reuters expected.
While March revenue figures are encouraging, analysts caution that retailers should not count their eggs before they hatch.
After all, gas prices — hovering around $4 — continue to weigh on consumers and that hurts stores that cater to lower-end shoppers. Analysts also say a more accurate picture of Americans' spending will emerge after April since an earlier Easter holiday this year likely pushed some sales into March.