Tax-rebate checks gave consumers a little extra money in their pockets during May, but most were still spending conservatively, buying necessities...
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.
Accordingly, Costco and Wal-Mart were among the strongest performers.
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But fewer rebate dollars made their way to the mall, and retailers such as Gap and American Eagle Outfitters 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, a research company.
“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.”
But retailers were still 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 was one of the few retailers to specifically mention a benefit from stimulus checks. The world’s largest retailer 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.
Rival Target, which has a somewhat more upscale clientele, 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 last month, while men’s apparel, jewelry, and lawn and patio sales were weakest.
Costco said same-store sales rose 9 percent, ahead of the expected 6.9 percent.
Department stores reported weaker results, but many still beat analyst expectations, and the luxury sector was strong.
J.C. Penney said same-store sales fell 4.4 percent, better than the 5.8 percent analysts expected.
Nordstrom reported a 10.9 percent increase in same-store sales, while analysts predicted a smaller 8.1 percent rise.
Nordstrom said last month’s results were helped by an earlier start to its half-yearly sale for women and children. The sale began May 21 rather than early June, as was traditionally the case. Nordstrom said this month’s results will be negatively affected by the change.
Mall-based apparel stores continued to struggle. Overall, according to a poll by Thomson Financial, specialty-apparel same-store sales fell 3.8 percent, a bigger drop than the 3.1 percent analysts expected.
Limited Brands said same-store sales fell 6 percent, missing the 5.5 percent drop analysts expected. The company’s stores include Victoria’s Secret and Bath & Body Works.
Gap’s same-store sales fell 14 percent, hurt by results from its Old Navy Stores. The result was worse than the 9.5 percent decline analysts expected.
Teen retailers, who tend to be a little more recession-proof than other apparel merchants, had mixed results.
American Eagle Outfitters said same-store sales fell 9 percent, worse than the 4.8 percent drop predicted. Meanwhile, Aeropostale had a 6 percent rise, meeting expectations, helped by positive reaction to summer merchandise.
Seattle Times business reporter Amy Martinez contributed to this story.