Retailers Report Sales Fell Again In May

By: Associated Press Email
By: Associated Press Email

Many U.S. retailers said same-store sales fell in May, as expected, as shoppers continue to spend cautiously, focusing on bargains and food.

The declines came in largely in line with analyst expectations, with frequent standouts such as The Buckle Inc. posting better results. The Buckle is based in Kearney, Neb.

Cheap chic discounter Target reported a bigger drop than analysts expected, as apparel and home products continued to be weak sellers.

Overall, necessities like food and health care products continued to be the strongest sellers.

According to a preliminary tally by Thomson Reuters, 13 retailers missed estimates, five retailers beat estimates and one matched expectations.

"There's general softness across the board, as consumers continue to face rising unemployment, falling home values and rising gas prices," said Ken Perkins, president of retail consulting firm Retail Metrics LLC. He expects same-store sales to fall 3.6 percent overall. "One good sign so far is that results aren't coming in drastically worse than expected, so maybe there is stabilization taking place here."

Another positive was some retailers said traffic had improved during the month.

Same-store sales, or sales at stores open at least a year, are a key indicator of retailer performance because they measure growth at existing stores rather than newly opened ones.

Economists closely monitor consumer spending because it accounts for about 70 percent of U.S. economic activity.

Drawing conclusions about the broader economy from the numbers is more difficult, Perkins said, because Wal-Mart Stores Inc., the world's largest retailer, stopped reporting monthly same-store sales as of this month. He said Wal-Mart accounts for about 10 percent of retail sales.

The world's largest retailer also has been a standout in recent months. "Wal-Mart has been lifting everybody for the last year and half," Perkins said.

Target same-store sales fell 6.1 percent, a bigger drop than the 4.3 percent analysts expected. Non-discretionary items such as healthcare and baby products and food were the best sellers, while apparel and home products were weaker.

Warehouse club operator Costco Wholesale Corp. said same-store sales slipped 7 percent in May. Its strongest categories included fresh food and other food products.

Meanwhile BJ's Wholesale Corp. said same-store sales fell 6.8 percent, while analysts predicted a 4.4 percent decline. Traffic was up 5 percent compared with a year ago, however. Food, TVs and computer equipment were the strongest sellers.

TJX Cos. -- which said same-store sales rose 5 percent, above expectations -- also said traffic increased.

Department-store operator Macy's Inc. said same-store sales slipped 9.1 percent, slightly above the 9.3 percent drop Wall Street expected.

The teen sector continued to be among the best performing sectors, with low-price stores doing the best. The Buckle Inc. and Aeropostale Inc. both known for good deals on trendy fashions, reported double-digit increases.

However, Abercrombie & Fitch -- which has kept prices high despite competitors' markdowns -- said same-store sales fell 28 percent. Last month, Abercrombie finally bowed to pressure and said it has started to reduce prices.

Limited Brands, which operates Victoria's Secret and Bath & Body Works stores, said same-store sales fell 7 percent, matching analyst expectations.

Gap same-store sales fell 6 percent, below expectations, though its Old Navy chain posted a 3 percent rise.


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