Wal-Mart and Costco reported April sales that rose more than analysts estimated as U.S. consumers, contending with gasoline at a record...
Wal-Mart and Costco reported April sales that rose more than analysts estimated as U.S. consumers, contending with gasoline at a record $3.65 a gallon, sought discounts on clothing and food.
Wal-Mart, the world’s largest retailer, said sales at stores open at least a year climbed 3.2 percent, beating its forecast and sending the shares higher.
Industry sales climbed 3.6 percent, the most since March 2007, the International Council of Shopping Centers said.
Costco’s 8 percent increase surpassed the 6.1 percent estimate, helped by higher gas prices. Excluding fuel, same-store sales rose a solid 5 percent as shoppers were attracted to buying merchandise in bulk.
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Consumers facing four consecutive months of job losses headed for Wal-Mart and Costco instead of malls.
Nordstrom posted a 3.8 percent drop in same-store sales, more than double the decline that Wall Street expected.
Saks sold clothes for as much as 40 percent off to draw shoppers.
As customer expenses rise, stores may need to keep up promotions, said Britt Beemer, founder of America’s Research Group.
“If you didn’t have a sale, you didn’t have customers,” Beemer said. “Consumers are having a hard time dealing with inflation in both food and fuel.”
To lure customers, apparel chains are discounting more. First-quarter profits are slated to be down by 14.9 percent, according to Ken Perkins, president of RetailMetrics, a research company in Swampscott, Mass. That compares to a projection in January of 5.3 percent profit growth.
Retailers’ first quarter ended in April and companies will start reporting their financial results next week.
“Consumers are focusing on value and price points and stretching their dollars,” said Perkins. “They are feeling the pinch on multiple fronts.”
He and other analysts expect only a modest rise in sales in May and June as consumers spend tax rebate checks that are starting to arrive.
“There’s too much going on,” in the economy, Perkins said. He and others expect shoppers to use the extra cash to pay down debt and catch up on utility and food bills.
That could be a disappointment for the Bush administration, which had hoped the checks would give the economy a much-needed lift.
Because of an extra shopping day last month compared to a year ago, the retail industry expected sales to rise in April.
Wal-Mart, which slashed prices as much as 30 percent in January, said customers are spending less before their paychecks arrive at the end of the month, signaling the economy is getting “tougher.”
Target posted a 3.1 percent gain in same-store sales, below the 4.5 percent estimate, as consumers shopped for necessities such as food and skipped higher-priced items such as jewelry.
TJX, which operates discount apparel and home stores including T.J. Maxx and Marshalls, said same-store sales rose a better-than-expected 8 percent. Discount apparel chain Ross’s 8 percent increase beat estimates, too.
Many mall-based apparel chains struggled, though teen stores fared well.
Among department stores, J.C. Penney reported a 1.7 percent decline in same-store sales, though that was better than the 4.6 percent declined analysts expected.
The Limited reported a 5 percent drop in same-store sales, about twice the expected drop. Gap reported a 6 percent drop in same-store sales, more than three times what was projected.
Compiled from Bloomberg News and The Associated Press