Retailers Rule March -- But What About April?

Retailers post their best monthly gain in 11 years, but the market is singing a different song.
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NEW YORK (TheStreet) -- March same-store sales showed the strongest monthly gains in 11 years, but this doesn't seem to be proving enough for investors, as retail stocks, for the most part, are remaining lackluster in Thursday trading.

The numbers, indeed, are telling a different story than the market. The International Council of Shopping Centers reported a 9.3% average gain in same-store sales, the best reading since 1999.

While 24 of the 26 companies tracked by

TheStreet

beat forecasts, the majority were up against very easy comparisons. The earlier Easter holiday also added an extra boost, leaving investors worried that April could fall short.

Earlier this week the S&P Retail Index hit a 52-week high, and even as retail sales see their fourth straight month of gains -- with economic indicators like jobs data proving iffy -- the retail recovery is proving far from bankable.

"Most companies are surpassing consensus comp estimates, but interestingly enough are falling short of more bullish sell-side estimates," Wall Street Strategies analyst Brian Sozzi wrote in a note. "We anticipated this could transpire and advised clients to approach the sector with caution going into results."

Promotional activity, which has eased, but still very much exists, is also putting a cap on the upside potential that can be realized from an increase in traffic and sales, Sozzi wrote.

While some retailers like

TJX

(TJX) - Get Report

,

Ross Stores

(ROST) - Get Report

and

Target

(TGT) - Get Report

upped guidance, for the most part companies side-stepped first-quarter forecasts, leaving investors to guess what they can expect when results are released later in the month.

Read on to see how retailers fared in March and what we can expect from the first quarter...

Abercrombie & Fitch

Abercrombie & Fitch

(ANF) - Get Report

was one of the biggest disappointments of the month, posting a 5% gain in same-store sales, which fell short of Wall Street's estimates of a 6.6% jump.

The news sent shares sinking 2.8% to $46.24 in morning trading.

By division, namesake stores saw a 10% increase, abercrombie spiked 12%, and Hollister slipped 1%.

While a gift-card promotion helped boost results during the month, Hollister still deteriorated significantly on a three-year basis, UBS analyst Roxanne Meyer wrote in a note.

Abercrombie continues to be predominantly an international story, as sales overseas more than doubled during the month to $45.8 million. Online sales were another bright spot, surging 45% to $27.9 million.

Aeropostale

Aeropostale

(ARO)

was one of the biggest winners in March, as comparable sales advanced 19%, significantly higher than the 11.2% gain analysts forecast.

The better-than-expected results prompted the teen retailer to up its first-quarter guidance. It now expects to earn 44 cents a share, compared with a prior outlook of 39 cents to 40 cents a share.

Aeropostale, which generally isn't given enough credit for its successes, is seeing shares grow 3.5% to $30.35 in morning trading.

American Eagle Outfitters

While

American Eagle Outfitters

(AEO) - Get Report

saw its same-store sales soar 15%, it failed to raise its first-quarter guidance as investors had hoped.

The company reaffirmed its first-quarter outlook in the range of 15 cents to 17 cents a share. This disappointment is leading shares down 5.1% to $17.69 in morning trading.

American Eagle saw negative comparable sales in its critical knit category, which Meyer said isn't surprising given markdowns.

Hot Topic

Hot Topic

(HOTT)

is spiking despite being one of the only retailers to report negative comparable sales. Instead, the stock is moving after the company said last night that it is issuing a dividend.

The goth-inspired retailer will pay a special one-time cash dividend of $1 and a regular quarterly dividend of 7 cents a share, to shareholders as of record on April 19.

This is overshadowing a 7.5% drop in same-store sales. By division, namesake stores tanked 11.2% and Torrid, which caters to the plus-size market, shot up 7.5%.

Hot Topic was up against tougher comparisons due to the popularity of

Twilight

merchandise last year. The company chose not to sell the

New Moon

DVD in stores this year.

Excluding Twilight merchandise from both this year and last, sales were up about 4%, Chief Financial Officer Jim McGinty said on a pre-recorded call.

Shares of Hot Topic are surging 11.8% to $7.89 in morning trading.

Target

Target finally saw a meaningful improvement in its apparel division in March, a segment that has been weighing down sales amid the recession.

As a result, the discounter posted a 10.3% jump in comparable sales, better than the 7.8% increase analysts expected. This marked the second consecutive month for positive transaction growth.

Target now expects first-quarter earnings to beat analyst estimates by 10 cents. Analysts are calling for earnings of 75 cents a share.

The company is set to release its first-quarter results on May 19.

Shares of Target are climbing 2.8% to $55.51 in morning trading.

J.C. Penney

J.C. Penney

(JCP) - Get Report

was one of the only retailers to miss expectations, posting a 5.4% rise in same-store sales compared with the 5.7% gain analysts projected.

Still, the department store boosted its first-quarter outlook. It now expects to earn between 20 cents and 24 cents a share, better than its previous forecast of 16 cents to 20 cents a share. Analysts are calling for earnings of 20 cents a share.

This upped guidance wasn't enough for investors, who sent shares falling 3.2% to $31.77 in morning trading.

Kohl's

Kohl's

(KSS) - Get Report

reported the largest gain of the month, with same-store sales soaring 22.5%, nearly double Wall Street's estimates of 12.4%.

The department store lifted its first-quarter guidance to the range of 55 cents to 57 cents a share. It previously said earnings would fall between 48 cents to 52 cents a share. Wall Street is calling for earnings of 56 cents a share.

Kohl's saw strength in sales of footwear, home goods and children's merchandise.

Nonetheless, shares of Kohl's are slipping 1.3% to $56.38 in morning trading.

Limited Brands

Limited Brands

(LTD)

posted its second straight increase in same-store sales, gaining 15% during the month. Wall Street was looking for a much smaller increase of 6.8%.

"Limited's 15% comp with strength at both Victoria's Secret and Bath & Body Works, reiterated our view that significantly increased innovation and lower promotions will drive both sustained comparable sales gains and margins," Meyer wrote in a note. She also reiterated her buy rating on the stock.

The specialty retailer did not provide commentary on its previous first-quarter guidance in the range of 5 cents to 10 cents a share.

Walgreen

Walgreen

(WAG)

, in particular, was helped by the earlier Easter, as shoppers gobbled up candies and other treats.

An extra weekday during the month also boosted sales of prescription medications, which have been weak due to a mild cold and flu season.

As a result, same-store sales grew 2.3%, slightly better than the 2% increase analysts expected. This was Walgreen's best performance since November.

By division, comparable pharmacy sales rose 2.4 percent, while front-end sales rose 2.2%.

Walgreen plans on providing investors with a combined March/April sales report next month to show a clearer picture of how the company fared with the holiday shift.

Ross Stores

Ross Stores

(ROST) - Get Report

is rising after it raised its first-quarter outlook on better-than-expected March sales results.

The off-pricer now expects to earn between $1.14 and $1.16 a share, from its earlier view of 92 cents to 95 cents a share. This still falls short of wall Street's guidance of 96 cents a share.

March comparable sales spike 14%, more than double analysts' outlook of a 6.4% increase.

Shares of Ross are advancing 3.8% to $56.25 in morning trading.

-- Reported by Jeanine Poggi in New York.

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