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Overall, results still better than analysts expected, with discounters, wholesalers seeing most gains
By Mae Anderson
Associated Press
Published on Friday, Jun 06, 2008
NEW YORK: Tax-rebate checks gave consumers a little extra money in their pockets during May, but most were still spending conservatively, buying necessities such as food and gas and shying away from splurging on clothing or furniture.
The result was some better-than-expected sales for the nation's retailers, with lower-priced merchants like discounters and wholesale clubs showing the strongest gains.
Costco Wholesale Corp. and Wal-Mart Stores Inc. were among the strongest performers, but fewer rebate dollars made their way to the mall, and retailers such as Gap Inc. and American Eagle Outfitters Inc. missed expectations.
''It was a great month for discount retailers, but the rest of retail is struggling to capture a share of the consumer's wallet,'' said Patricia Edwards, a portfolio manager and retail analyst at Wentworth, Hauser & Violich in Seattle.
Overall, results were better than the gloomy May analysts predicted as consumers still shopped despite rising energy costs, declining home values and tightening credit, and some
analysts saw some glimmers of a possible pickup in business later this year. And tax-rebate checks helped offset rising gas prices, said Ken Perkins, president of RetailMetrics LLC, a research company in Swampscott, Mass.
''It certainly looks as though gas tanks didn't siphon off all of the rebate stimulus,'' he said. ''Consumers were able to spend in May.''
Michael P. Niemira, chief economist at International Council of Shopping Centers, said May results, coupled with a hoped-for decrease in gas prices in the coming months, could be the start of a turnaround in the sector. Gas prices now average close to $4 a gallon nationwide, and, while they are expected to edge higher in the short term, are predicted to decline after that.
But retailers still were wary. Even Wal-Mart, which surpassed analyst forecasts, acknowledged consumers' reluctance to spend.
''Our customer is clearly under pressure when it comes to higher gas prices, higher food prices for that matter,'' said Tom Schoewe, Wal-Mart's chief financial officer.
The UBS-International Council of Shopping Centers retail sales tally for May rose 3 percent, surpassing the 1 percent growth estimate. Fiscal-year-to date, the average monthly same-store sales tally has risen 2 percent.
Wal-Mart said same-store sales rose 3.9 percent, or 4.4 including fuel sales while analysts surveyed by Thomson Financial predicted a 1.6 percent rise.
Target Corp. said same-store sales fell 0.7 percent, while analysts expected an 0.2 percent drop. Health care, electronics and perishables were the company's strongest sales categories in May, while men's apparel, jewelry, and lawn and patio sales were the weakest.
J.C. Penney Inc. said same-store sales fell 4.4 percent, better than the 5.8 percent analysts expected.
NEW YORK: Tax-rebate checks gave consumers a little extra money in their pockets during May, but most were still spending conservatively, buying necessities such as food and gas and shying away from splurging on clothing or furniture.
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