Bottom may be reached, but a quick recovery's still out of sight, some caution Helped by a timing shift for Easter, warmer weather and continued pent-up demand, U.S. retailers posted better-than-expected April sales, results showed Thursday. That, coupled with better inventory and expense control, prompted retailers including Gap Inc. and Target Corp. to raise their profit forecasts. Industry heavyweight Wal-Mart Stores Inc. also gave a positive indicator that a pause in discretionary consumer spending may have showed further signs of easing. Early Thursday, Wal-Mart said April sales rose 5%, exceeding its own projection and analysts' 2.9% average estimate. That was driven by the Wal-Mart chain in the U.S., which saw an acceleration of traffic and strength in seasonal and discretionary items. Home products posted gains. Retailers such as J.C. Penney Co. also showed that across-the-board cutbacks in discretionary items such as women's apparel may be easing. Shares of Wal-Mart added 2.4% in morning dealings, while Gap rose 4.1% and Target climbed 3.6%. Tracking the broader sector, the S&P Retail Index ) rose 0.3% to 339.46. Consumer confidence has seen some improvement along with some encouraging economic signals. The Labor Department said Thursday that initial claims for unemployment benefits fell in the latest week to the lowest level since January, and earlier this week Federal Reserve chief Ben Bernanke said the U.S. economy is bottoming out and is likely to turn upward later this year. An increase in tax refunds and a year-over-year drop in gasoline prices may also have helped to boost some spending during the month, analysts said. Still, some lingering concerns remain as to whether April's improvement may have lasting power. Consumers are still budget-conscious and prefer to shop when there are bargains to be had, analysts said. While retailers' inventory control helped them to reduce clearance sales, in-season demand was mostly driven by promotions -- including "buy one, get one free," or extra reward points -- that still is a negative to profit. "The underlying pattern remains the same with consumers remaining cautious in discretionary purchases," said Erin Armendinger, managing director of the Jay H. Baker Retailing Initiative at the Wharton School of the University of Pennsylvania, in an interview. "We've hit the bottom on consumer spending, but it's not going to be a quick sweep out of this. It's going to be a slow recovery." For its part, Wal-Mart said it expects "challenging comparisons" against the year-earlier second quarter, results for which benefited from stimulus checks. Sales at the Wal-Mart chain in the U.S. rose 5.9% on the month, helped in part by Easter falling in April this year instead of March last year. Sam's Club sales were up 0.3%, missing estimates of a 1.8% gain. as jewelry and furniture sales remained soft. Wal-Mart said it will no longer report monthly sales. J.C. Penney forecast an unexpected profit of 9 cents to 11 cents a share for the first quarter after April sales -- down 6.6% -- came in better than the company expected. Still, the company projected May sales to decline 9% to 12%. Target sales rose 0.3%, compared with 0.4% gain expected by analysts. The company said first-quarter per-share profit will be "well above" analysts' average estimate of 52 cents a share, after management made moves to reduce discounts more than expected and to control expenses. Some surprising receipts Total April sales rose an unexpected 1.2%, compared with analysts' forecast of a 0.2% decline, after discounters, department stores and apparel retailers in aggregate posted upside surprises, according to Thomson Reuters. Gap's sales fell 4%, about half of the 7.8% decline expected by Wall Street analysts. Gap now sees first-quarter profit of 29 cents to 30 cents a share, ahead of analysts' 24-cent consensus forecast. Kohl's Corp. also raised its first-quarter profit target as sales fell less than analysts expected. Other retailers including Children's Place Retail Stores Inc. also exceeded expectations and gave a sharply better-than-expected first-quarter profit outlook. Aeropostale Inc. , for one, saw sales jump 20%, more than two times the 8.5% increase expected by Wall Street. The teen clothing retailer also gave a rosier-than-expected outlook. On the negative surprise side, Hot Topic Inc. , which has been a segment outperformer, posted a 3.1% sales gain on the month, less than half of what analysts estimated. Saks Inc. continued to be hurt by luxury shoppers cutting back and posted a worse-than-expected 32% decline in sales. And Costco Wholesale Corp. said April sales fell 8%, also missing estimates of a 6.8% decline. The largest U.S. wholesale club said Easter led to one fewer selling day, cutting same-store sales by 2% to 3%. A stronger dollar also dented Costco's sales.

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