retail

Luxury Spending Up Sharply; Target Disappoints

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  The rich went shopping in May, with luxury retailers Saks Fifth Avenue and Neiman Marcus reporting big gains. And, while other stores had solid gains for the month, there were a few letdowns, with Target coming in below expectations.

Kantar Retail, the Columbus, Ohio-based consulting firm, says its index of same-store sales rose 5.7% in May, after a combined March-April gain of 5.4%. (Results of the two months were combined because of a late Easter.) And it's certainly an improvement from May 2010, when sales rose just 2.7%. The International Council of Shopping Center, which tracks a slightly different group of retailers in its index, sales chain-store sales rose 5.4% on a year-over-year basis.

Saks posted a whopping 20.2% gain, in part because of a timing shift with a promotional event. But even without that change, it says sales would have shown a percentage gain in the mid-teens, fueled by a strong demand for women's designer apparel, shoes, handbags, and accessories; men's clothing, shoes, and accessories; jewelry; cosmetics; and fragrances. And at Neiman Marcus, where comparable results rose 14.8%, it was the same story, with women's apparel and shoes, designer handbags, jewelry and men's all selling well. At Nordstrom, same-store sales gained by 7.4%.

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But the high price of gasoline is clearly affecting less affluent shoppers, with Target reporting a 2.8% gain in same-store sales, at the low end of its forecast and below investor expectations. Those lower numbers were "driven by a much slower traffic trend in the second half of the month," says Gregg Steinhafel, chairman/CEO, says in a release. "Our guests continue to shop cautiously in light of higher energy costs and inflationary pressures on their household budgets." At Kohl's, sales gained just 0.8%, and at JCPenney, they declined 1%.

Kantar, which measures consumers' intention to spend, says those intentions have deteriorated for the third straight month, with higher fuel prices a key reason for shoppers' timidity.

Shoppers' perceptions of their household financial health, which Kantar measures via six factors, turned more negative than positive, with consumer perception of their home's value decreasing the most. Consumers continue to feel positively about job security and the value of their investments, it reports.

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