US retailers' April sales could not keep up with the torrid pace set in the first three months as shoppers took an after-Easter break, but higher prices protected profits, the companies reported on Thursday.
Wal-Mart Stores Inc, the world's biggest retailer, said April sales growth reached the low end of its forecast, slightly below Wall Street expectations, but it made no change to its earnings forecast for the just-ended fiscal quarter.
Target Corp, Sears, Roebuck and Co, Gap Inc and Kohl's Corp also posted April sales growth that fell short of analysts' expectations, but Kohl's maintained its quarterly earnings forecast and Gap said its profits would beat estimates.
Department store chain J.C. Penney Co Inc said April's sales pace was less than half of what it recorded in March, yet it also raised its earnings forecast.
"April sales performance was lower than expected for the overall retail sector," said Sanford Bernstein retail analyst Emme Kozloff.
Kozloff said wealthier consumers continued to outspend lower-income shoppers, noting that luxury stores posted stronger sales growth than off-price chains.
The Standard & Poor's retailing index was down 2.5 percent in late-morning trading. Wal-Mart, one of the 30 companies that make up the Dow Jones industrial average, was down 2.1 percent, weighing on the broader market.
Lean inventories and well-received clothing styles helped retailers sell more full-priced merchandise this spring, boosting profitability even as sales growth slowed.
Most retailers operate on a fiscal year that ends in January, and will report first-quarter earnings this month.
Overall, analysts were expecting April sales at stores open at least a year - a key retail measure known as same-store sales - to show a 4.9 percent increase, according to research firm Thomson First Call. In March, retailers turned in a strong 6.6 percent same-store sales gain.
Some analysts say same-store sales growth probably peaked in March, and retailers may struggle with sales growth through the summer now that many consumers have spent fatter income tax refund checks they received this year.
Wall Street has been keeping a close eye on steep gasoline prices and the possibility of rising interest rates, both of which could also curb consumer spending.
Bentonville, Arkansas-based Wal-Mart posted a 4.4 percent increase in April sales at its US stores open at least a year - a key measure known as same-store sales. Analysts on average had expected a 4.5 percent gain.
The company had said all month that sales would likely reach only the low end of its forecast for a 4 percent to 6 percent gain because many customers did their Easter shopping in March instead of April.