By Shannon Bond
US retailers reported mixed sales results for May as high fuel prices andeconomic uncertainty weighed on shoppers.
Sales rose 5.2 per cent at stores open at least a year, ahead of a forecast 5.1 per cent gain, according to Retail Metrics. But the headline figure was “misleading of broader results,” said Ken Perkins, the research firm’s president, because it was “entirely due” to higher petrol prices, which boosted Costco, the warehouse discounter.
Costco’s sales surged 13 per cent, ahead of estimates, but stripping out fuel sales and the effects of currency exchange, the company’s sales rose just 7 per cent. Fellow warehouse club BJ’s Wholesale also benefited, with petrol sales contributing more than half of its 7.4 per cent sales rise.
Excluding Costco’s petrol and currency effects, same-store sales were up a more modest 3.8 per cent, Retail Metrics said, slightly below the 3.9 per cent estimated. More than half of the chains surveyed missed expectations as consumers cut back on spending.
“Our guests continue to shop cautiously in light of higher energy costs and inflationary pressures on their household budgets,” said Gregg Steinhafel, chief executive of discounter Target, which reported that sales rose just 2.8 per cent last month, missing expectations of a 3.5 per cent gain and well below April’s 13 per cent surge.
The poor health of the housing market and uncertainty over jobs has also crimped consumer sentiment, Mr Perkins said, raising the question, “is this soft patch that we’re experiencing here just a soft patch or is it indicative of slower growth to come?”
Gap, the clothing retailer, reported a 4 per cent drop in sales following April’s 8 per cent rise. Sales at the company’s Banana Republic chain sank 6 per cent.
Limited Brands, the owner of Victoria’s Secret and Bath & Body Works, missed expectations of a 7 per cent gain, with sales rising just 6 per cent in May compared with 20 per cent in April.
Department stores were also pinched as middle-income Americans tightened their wallets, with JC Penney’s sales falling 1 per cent and Dillard’s and Kohl’smissing expectations. Macy’s, however, on Wednesday reported a 7.4 per cent rise in sales, ahead of expectations.
Luxury retailers continued to fare well, with Saks recording a 20 per cent rise, the biggest gain among the chains surveyed by Retail Metrics and more than triple analysts’ estimates, as shoppers snapped up designer clothes, shoes and handbags.
The high end of the market and the wealthiest consumers “are doing just fine”, Mr Perkins said. But “the vast majority of middle-income consumers don’t have much discretionary income, and are not seeing a lot of good, high-paying jobs out there.”
