Most U.S. retailers likely saw sales fall in May
Written on June 2, 2009
Despite Memorial Day sales, warmer weather and deals such as $1 flip-flops, most U.S. retailers are expected to post declines in same-store sales in May as shoppers kept hunting for bargains in the recession.
Department stores and chains catering to trendy teens likely suffered at the expense of discounters.
Only eight of 30 retailers are expected to report growth in May sales at stores open at least a year, or same-store sales.
Reports from retailers this week are likely to show that most U.S. shoppers continue to search for low prices 17 months into the longest recession since the Great Depression.
Mounting job losses, a credit crunch and a severely weakened housing market have led many consumers to shy away from purchasing things they do not need, despite early signs of stabilization like improving consumer confidence.
“It’s too early to call for sustainable growth,” said Lazard Capital Markets analyst Todd Slater.
May same-store sales are expected to fall 3.6 percent from a year earlier, when they rose 1.1 percent, according to Thomson Reuters’ revenue-weighted index of sales from 30 retailers. Such a decline would be less than the year-to-date average of a 4.5 percent drop.
The data excludes Wal-Mart Stores Inc, the world’s largest retailer, which stopped reporting monthly sales data with April’s results. Wal-Mart, which has been one of the best-performing retailers in the recession, had held about 50 percent of the weighting in the monthly average cash advance loans.
“Now we’re going to see actually a true picture of really how the other retailers fared,” said Jharonne Martis, senior research analyst at Thomson Reuters.
Analysts cautioned that investors should not get excited for a rebound just yet, especially since retailers face a tough comparison this summer. Last year, summer sales were boosted by consumers spending their tax rebate checks.
The S&P retail index fell 6 percent in May, though it rose sharply on Monday to recover much of those losses.
Lazard’s Slater said now is the time for investors to start looking at retailers that could show some improvement in the fourth quarter, including Limited Brands Inc and American Eagle Outfitters Inc.
BUYING BASICS AND BARGAINS
Retailers catering to higher-end shoppers faced the most pressure. Department stores are all expected to post lower same-store sales, with the steepest drop at Saks Inc.
At lower-priced outlets such as TJX Cos Inc, whose chains include TJ Maxx and Home Goods, same-store sales are expected to rise even more than they did a year earlier. Chains that sell gasoline along with discounted items — Costco Wholesale Corp and BJ’s Wholesale Club Inc — face the pressure of lower gas prices dragging down sales.
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