Updated from 9:32 a.m. EDT

U.S. retailers reported generally strong same-store sales for March, supporting analysts' perceptions that shoppers kept busy in the first quarter. Several companies also lifted earnings projections above Wall Street estimates.

"The trend is quite positive," said Richard Keim, managing director at Kensington Management Group. "There were a few disappointments, but there were a bunch that were better than expected."

Despite the good results, shares of most retailers were dropping in morning trading, an action Keim thinks is profit-taking after a hardy run-up in prices. Investors could also be focusing on the tough comparisons that materialize in the year's second half, Keim said.

"You'll see a stabilization once world news gets a little better," said Keim. "Then, it will be off to the races. We're in a pause."

Earlier Thursday, the world's largest retailer, Wal-Mart ( WMT), said March same-store sales rose 6%, which was at the high end of its guidance. Total sales rose 14% at $22.05 billion. The company's core Wal-Mart division had a 5.6% increase in monthly same-store sales while total sales increased 12.3% to $16.72 billion.

The company's Sam's Club unit had a 8.3% rise in same-store sales with total sales up 9.3% to $3.38 billion.

Wal-Mart said it sees April same-store sales up 4% to 6%, though because Easter is one week earlier this year, it expects results to come in at the low end of that range. The stock was trading down $1.03, or 1.8%, at $56.95.

Target ( TGT) said same-store sales rose 7.3%, ahead of expectations, while total sales increased 13.2% to $4.4 billion.

The company's core Target division had a 7.8% increase in same-store sales, while its department stores Mervyn's and Marshall Fields, which Target is in the process of selling, each had positive results: Mervyn's same-store sales rose 0.8% while Marshall Field's were up 9.9%.

As a result, the company said it expects first-quarter earnings to come in ahead of the First Call median consensus for 45 cents a share. Shares were down 40 cents, or 0.9%, at $44.41.

"An important thing is that some of these guys haven't had as much promotions as last year, and that's a good thing," Keim said. "If you can show good comparisons and if you promote less, then your margins will be better and your bottom line will be better."

Another big-box retailer, Costco ( COST), posted an 11% jump in March same-store sales, with total sales up 14% at $4.41 billion. The company cited the favorable impact of stronger foreign currencies.

The company also adjusted its same-store sales result for February to an increase of 10%, from an originally reported increase of 11%. The company cited a change in its vendor coupon and rebate programs. The stock was down 48 cents, or 1.3%, at $37.67.

J.C. Penney ( JCP) had a 11.4% rise in same-store department store sales, ahead of estimates for a 7% increase. The company said total sales in the period rose 10.5% to $1.55 billion.

As a result, the company offered first-quarter earnings guidance of 20 cents to 25 cents a share, compared with a profit of 5 cents a share in the same quarter a year earlier. Analysts were expecting 17 cents a share. Investors rewarded the company in trading, sending the shares up 18 cents, or 0.5%, to $34.75 lately.

"J.C. Penney is showing a wonderful turnaround situation," Keim said. "They're beginning to hit on all fours and you're really seeing the fruit of their labors."

Kohl's ( KSS) had a 0.9% decrease in March same-store sales, while total sales increased 9.2% to $997.2 million. Estimates were calling for a same-stores sales increase of 2.6%. Shares were down $1.82, or 3.9%, at $45.03.

"Kohl's is at best a second-hand story," said Keim. "A lot of these retailers have tough comparisons going into the latter half of the year, but Kohl's should have an easy comparison, which makes it interesting."

Keim thinks Kohl's, which has been working to turn around its business, should start to see better results in the back half of 2004. Conversely, many other retailers started to see improving results in the last two quarters of 2003, which should make their comparisons more difficult.

Richard Hastings, retail sector analyst at Bernard Sands, thinks technical indicators on Kohl's shares suggest a new bottom may be forming near $40 a share when the stock will reach oversold levels. "The risk is that without more excitement, Kohl's shares could trend lower and trade at slightly lower than peer valuations until quarterly earnings confirm a new upward profit trend," he said.

Federated Department Stores ( FD) said same-store sales in March were up 6.8% and total sales also rose 6.8% to $1.32 billion. Analysts had been expecting a 5.5% increase in same-store sales.

The company said it sees April same-store sales up 6% to 7% and lifted its first-quarter earnings guidance to 45 cents to 48 cents a share, from a prior guidance of 35 cents to 40 cents a share. Federated also said full-year earnings should be $3.90 to $4 a share, excluding items. Analysts are calling for 38 cents a share in the first quarter and $3.94 a share for the year. Shares were down $1.63, or 3%, at $51.96.

Sears ( S) had a 0.1% increase in same-store sales, while analysts were calling for results to be flat with the prior-year period. Total March revenue was down 1.3% at $2.37 billion. The stock was dropping 64 cents, or 1.5%, at $43.07.

Gap ( GPS) had an 8% increase in same-store results, with total sales up 10% at $1.5 billion. The company's Banana Republic division was the leader with a 25% surge in comps. Shares were down 57 cents, or 2.6%, at $21.76.

Disappointing analysts, teen retailer Abercrombie & Fitch ( ANF) said same-store sales in March were down 1%, compared with estimates for a 2.3% increase.

But investors were bidding the stock up in Thursday premarket trading because the company said it expects first-quarter earnings to come in above its prior guidance of 27 cents a share and the prior-year's results at 28 cents to 30 cents a share. Analysts are expecting 28 cents a share. The company earned 26 cents a share in the first quarter last year.

Abercrombie had total sales in March up 18% at $169.6 million. The stock was lately down $2.23, or 6.2%, at $33.87.

Luxury retailer Neiman-Marcus ( NMGa) continued to impress with March same-store sales surging 25.7%, more than double the estimates for a 10.5% increase. Total sales jumped 25.8% to $345 million.

The company said it sees third quarter same-store sales up 19% to 21%. Shares were down 57 cents, or 1.1%, at $53.10.

And Nordstrom ( JWN) had a 15.9% increase in March same-store sales with total sales up 19.8% at $620.8 million. Estimates were calling for an 11.6% increase.

The company also said it expects to exceed its earlier guidance for 23 cents to 28 cents a share in the first quarter. Analysts are calling for 30 cents a share. Shares were falling 66 cents, or 1.7%, to $39.33.

Jacques Roizen, a director at the restructuring firm Alvarez & Marsal, thinks last year's results do not offer a good benchmark to gauge this year's results, citing the war with Iraq.

"It's not surprising to see Nieman-Marcus up 25.7%, because these were not the type of retailers shoppers were going to last year in the environment they were in," he said.

Roizen called Thursday's results "artificially high" as consumers focused on the war last year and didn't venture out as much to shop. "By comparison," he said, "March 2004 offered to retailers a level of confidence that was much more encouraging."

Roizen also cautioned that "these are relative measures, so it would not be reasonable to expect these numbers year round," or even for April.

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