May Sales A Little Better, Giving Stores Some Breathing Room

store front with sale signThe nation's biggest retailers caught a bit of a spring break in May, with same-store sales results at many chains coming in a little better than expected. But economists are quick to point out that the gains-some fueled by rebate-check spending-are more evidence that consumers are opening their wallets only for essentials.

"May came in better than expected," says the International Council of Shopping Centers, in its analysis of 37 chain stores. "But, it is very clear that consumers are spending in a conservative manner as the lift largely came from an increase in sales in the wholesale, drug store and discount sectors."

TNS Retail Forward, which includes about 40 retailers in its index, says May sales grew 3.2%, down slightly from a 3.7% sales-weighted composite reported last month, but up from the 2.7% composite reported in May of 2007. "Shoppers are counting on those tax rebates for everyday spending and even a few big-ticket purchases," it notes. "The retail numbers suggest those dollars are starting to have an impact that should last for several months as more shoppers get their rebates." (The government will finish mailing checks in July.)



Clothing retailers posted bad news, with many of the declines quite steep: Gap's sales fell 14%, Chico's dropped 16.9%, and the Limited, parent of Victoria's Secret and Bath & Body Works, slid 6%. Even teen retailers saw drops, including American Eagle, Abercrombie & Fitch, Hot Topic and Wet Seal. (Exceptions include Aeropostale, which says sales gained 6%, and sales at Buckle, which jumped 34.7%.)

Shoppers continued to shun department stores, even luxury retailers. Sales fell 8.7% at Saks, 8.6% at Gottschalk's, 7.2% at Kohl's, 7% at Dillard, and 4.4% at JCPenney. Nordstrom, though, had a great month, with sales climbing 10.9%.

Still, consumers clearly are looking to buy a little more than bread and water. At Wal-Mart, for example, same-store sales gained 4%, and were especially strong in grocery, health and wellness. But it also saw gains in a few non-essential areas, including entertainment, and surprisingly, home. In fact, "the home area showed its first comparable store sales increase in more than two years," the company says.

At this point, the ICSC is predicting a similar gain for June sales-a 2.5%-3.0%increase, "which will be helped by fuller distribution of the federal stimulus money."

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