New York—Helped by a later Mother’s Day, the second biggest gift holiday after Christmas, and continued consumer spending on spring/summer fashions, most retailers reported a comparable store sales gain today.
According to Thomson Reuters’ index of 18 leading retailers, May comparable store sales were up 3.9%, ahead of the 3.6% that analysts’ average estimate expected. While the figure was much more robust than the 2.2% increase posted in April, it was below the 5.8% increase reported in May 2011. (Since most retailers closed their books on Saturday, Memorial Day weekend sales will be included in June figures).
While a drop of gasoline prices may be helping with discretionary spending, so is demand for newness especially in apparel and accessories.
“The pent-up demand is continuing to pour out a little, said Ken Perkins, president of Retail Metrics LLC, a research firm.”I wouldn’t say it’s happening in droves. But consumers are updating their wardrobes.”
Still other indications this week show continued cautiousness in spending. On Tuesday, the U.S. consumer confidence index declined to its lowest level in four months, 64.9 from 68.7 in April.
The U.S. Commerce Department said the U.S. economy grew at only 1.9% in the first three months of the year, below what was expected.
‘Back to Normal in Retail’?
Nonetheless, “the general tenor of the reports shows an underlying strength of the U.S. consumer,” Joel Bines, managing director of AlixPartners told Dow Jones.”We are back to a bit normal in retail where consumption is at a relatively strong pace.”
While retailers including Walmart, JCPenney, Dillard’s, Abercrombie & Fitch and others no longer report monthly comparable store sales, among those that did today many reported modest sales increases: Limited Brands, Gap Inc., Target, TJX Cos. Ross Stores, Nordstrom, Saks Inc. and Macy’s.
Macy’s Inc. comparable store sales were up 4.2% ahead of the 4% increase analyst’ consensus predicted. “The momentum in our business continued in May, and came on top of a very strong month last year,” Terry Lundgren, ceo, said, noting that growth came from stores, online, and all geographic areas and categories.
Target reported 4.4% comp sales growth, while analysts had estimated 3.5%. Target said larger average transaction sizes helped fuel the increse with food and apparel strong, while the retailer saw weakness in its home department.
Limited Brands Inc. posted a 6% comp stores ahead of analysts’ estimate for 4%. projected.
Kohl’s reported a 4.2% drop in comparable store sales, below the projected 1.2% decline, and expects second quarter sales to be “modestly” down. “We made some progress in building our inventory levels, but continue to expect lower units to hinder our sales until the back-to-school season,” Kevin Mansell , ceo, said.
Gap Inc. posted a disappointing 2% comparable store growth, when analysts expected 3.1%. However, Glenn Murphy, ceo, said he was “pleased with overall customer response to summer products in May which helped us deliver positive comparable sales for the company.”
Nordstrom Inc. posted a 5.3% rise in comparable store sales ahead of the 4.7% analysts expected. Saks Inc. reported comparable store sales increased 4% when analysts were looking for 2.5%. Strong categories during the month at Saks included women’s contemporary apparel, women’s footwear, fashion and fine jewelry, cosmetics and fragrances and men’s contemporary apparel
TJX Cos.., parent to T.J. Maxx and Marshalls, reported an 8% rise in comparable store sales beating analysts’ estimate for a 5.3% rise. Another off pricer Ross Stores Inc. had an 8% in its May comparaable store sales, topping analysts’ estimate for a smaller 5.3% increase.
Zumiez Inc. reported the largest comparable store sales increase with a 13.7% jump when analysts expected a 6.6% rise. The teen oriented skateboarding, surfing and snowboarding retailer elated apparel said an increase in spending per transaction played a key role in the rise as customers paid higher prices
Costco Wholesale Corp.‘s U.S. Comp sales excluding gasoline rose 5%, beating expectations for 4.4%.
Stage Stores Inc. reported its comparable store sales jumped 8%, nearly quadruple what was expected, and the best monthly gain in a decade.
But several teen retailers had less than stellar reports. Wet Seal Inc. posted an 8.8% decline in comparable store sales when an 8.3% drop was expected. Softness in knit tops and screened tee shirts overshadowed growth in several other categories, said CEO Susan McGalla.
“Through the remainder of the quarter, we will continue to shift our assortment toward strong performing categories, including woven tops, jeans, dresses and shoes, to better position Wet Seal for the back-to-school season,” McGalla said.
Buckle Inc. said comparable store sales rose 0.2%–less than a 3.3% increase analysts expected, making this the third month in a row the company has missed analysts’ projections.