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NEW YORK CITY-It may not be a recovery, but retail chain-store sales performed better than expected, declining just 0.1%, according to the International Council of Shopping Centers’ Chain Store Sales Trends Index.

Milder weather, a decrease in discounting and low volume resulted in the third consecutive decline in deterioration since November’s nadir, said Michael Niemira, ICSC’s chief economist and director of research.

“Although it is too soon to declare a sustainable improvement ahead–given that the underlying economic conditions continue to show considerable weakness,” Niemira wrote in the report. “It was at least an encouraging development.”

However, much of the surprise was due to Wal-Mart, which posted 4.5% comp gains (including Sam’s fuel sales, 5.1% increase without). Without the super-discounter, the index would have declined 4.3%. Surprisingly, drug stores (down 1.6%) dragged down the index, which would have posted a 0.1% gain if those sales were excluded.

Wal-Mart boosted the discount sector, which reported a 3.1% increase. Luxury stores continued their slide, with a 19.2% drop, followed by department stores with a 9.8% decline. Apparel stores dropped 7.9%.

Kohl’s posted better comps than expected, declining just 1.6%. Weather was one factor, said a research report by investment and private equity firm RW Baird, of Chicago.”Temperatures were one degree above average (vs. one below), supporting early sales of spring merchandise,” the report said. “Lower precipitation relative to historical norms likely lifted traffic.”

Wholesale clubs declined 0.9% (with Costco reporting a 3% drop), though if fuel sales were excluded, the sector posted a 5% gain.

ICSC anticipates that the sales will be flat to down 1% from March 2008.

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