Most retailers posted disappointing May sales as recession-weary shoppers cut spending at stores ranging from high-end chains to discounters like Target Corp
While there have been early signs of stabilization such as improving consumer confidence, issues such as unemployment and the troubled housing market have led many Americans to take on a thriftier attitude, spending on food and other everyday essentials and not much else.
Sales were weaker than expected at 63 percent of the 30 retailers tracked by Thomson Reuters. Upscale chains posted some of the worst May sales at stores open at least a year, or same-store sales.
The high end continues to struggle, those in the discretionary spend segment are really continuing to get clocked, said Ken Perkins, president of Retail Metrics.
Wal-Mart Stores Inc
We felt that the May results would signal that we're not yet out of this consumer doldrum that we've been in and it's going to take some wind out of the sails of retail stocks, said Susquehanna Financial senior consumer analyst Thomas Filandro.
Shares of most retailers fell. The S&P Retail Index <.RLX> was down 2.5 percent after rising in recent days.
According to data from Thomson Reuters, May same-store sales fell 4.8 percent compared with May 2008. That was worse than the 4.5 percent decline seen earlier in the year, and analysts had expected that May sales would fall only 4.1 percent.
Looking ahead, the International Council of Shopping Centers forecast a 3 to 4 percent drop in June same-store sales, less than the 4.6 percent decline it saw in May. June's sales face a tougher comparison to last year as consumers then were spending the bulk of government stimulus checks, analysts said.
Costco Wholesale Corp's
Target Corp and BJ's Wholesale
Food was one of the best sellers at the wholesale clubs, while Target's strongest performance came from healthcare, household, personal and baby care items. Target's sales of clothing, especially women's apparel, were weak and it expects June same-store sales to decline at a mid-single-digit rate.
TJX Cos Inc
Family Dollar Stores Inc
Purchases of necessities boosted sales at drugstores Walgreen Co
BREAK THE CYCLE
The steepest declines came from Abercrombie & Fitch
If I was a high-end retailer, the thing I'd be worried about is how to break that cycle once people get in the habit of shopping at lower-priced chains, said Stephen Hoch, marketing professor at the Wharton School of the University of Pennsylvania and director of the Baker Retailing Initiative.
Sales at Saks, Nordstrom Inc
In the teen category, double-digit jumps at Aeropostale Inc
While Wal-Mart did not issue monthly sales data, investors will watch for any general comments it makes about sales as it talks to members of the media on Thursday and addresses shareholders and analysts at meetings on Friday. Earlier on Thursday it said it would add more than 22,000 jobs this year at its stores in the United States.
Shares of Wal-Mart were down less than 1 percent.
(Additional reporting by Martinne Geller in New York, Ben Klayman, Ian Sherr and Brad Dorfman in Chicago, editing by Dave Zimmerman and Matthew Lewis)