Cool, wet weather in April combined with an earlier Easter and one less shopping day conspired to reduce sales for the month. The news is not all bad, though, as some retailers are still projecting a profitable quarter as they have been able to stem discounting and work through inventories. Among the April retail sales winners were Costco (COST), Limited Brands (LTD) and TJX Corp. (TJX). Among the retail stock losers were Target (TGT) and Kohls (KSS).

Among the best performers were discount retailers like Costco Warehouse Corp. (COST), Limited Brands Inc. (LTD), and TJX Corp. (TJX). Costco reported an 11% jump in sales, just off analysts’ estimates of 11.2%. Limited, parent of the Victoria’s Secret stores, saw sales rise 4%. TJX also reported same-store sales up 4% and total sales up 10% for the month.

Not all discounters fared so well. Target Corp. (TGT) same-store sales fell 5.9%, more than double the expected drop of 2.3%. Kohl’s Corp. (KSS) had a 7.7% drop in same-store sales, slightly better than expected, and total sales fell 5.0%.

Higher end retailers such as Saks Inc. (SKS) and Nordstrom Inc. (JWN) performed better. Saks reported a rise in same-store sales of 3.2%, less than expectations of 4.4%. Nordstrom sales jumped 7.5% at stores open at least a year, well above analysts’ estimates of 6.2%.

Stores catering to the teen population did not fare well as a group. Aeropostale Inc. (ARO) same-store sales fell 5%, Gap Inc. (GPS) sales fell 3%, and Abercrombie & Fitch Co. (ANF) sales fell 7%.

In March retailers posted an overall gain of 9%, the best one-month performance in more than 10 years. If March and April sales are combined, sales grew 4% overall, the best performance in four years.

The other piece of good news was that revenues were better as stores did not need to discount as heavily as they have been. Sales are expected to pick up this month as the weather warms up and shoppers head out to load up on summer gear.

High unemployment still dogs the retail industry, but today’s report on fewer initial jobless claims and a drop in continuing claims. Another bit of encouraging news is the US productivity in non-farm businesses dropped to 3.6% in the first quarter of 2010, from 6.3% in the previous quarter. The drop indicates that layoffs have slowed, and that hiring may be picking up. However labor costs fell 1.6% during the quarter, increasing deflationary pressure.

As an economic indicator itself, retail sales appear to support the contention that as the economy improves middle-class shoppers return to their preferred retailers and leave the discount stores they turned to during the worst of the recession. Retailers just hope that everyone is ready to buy a new swimsuit this summer.

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