NEW YORK – Consumers stepped up their shopping in May after tax rebate checks began hitting mailboxes, giving many of the nation’s retailers stronger than expected sales for the month. Still, there were signs that many people are still focusing on necessities such as food and gas.
Discount and lower-priced stores such as Costco and Wal-Mart were again among the strongest performers, benefiting from a blip up in sales as consumers spent some of their rebate money.
Analysts had predicted a gloomy May, with consumers contending with rising energy costs, declining home values and tightening credit. Consumer confidence reached a 16-year low in May, the Conference Board reported late last month.
However, according to a preliminary report from Thomson Financial, of 31 retailers reporting their May sales on Thursday, 18 beat expectations, three met expectations and 10 missed. The tally is based on same-store sales, or sales in stores open at least a year; they are considered a key indicator of a retailer’s strength.
“It certainly looks as though gas tanks didn’t siphon off all of the rebate stimulus,” said Ken Perkins, president of RetailMetrics, a research company in Swampscott, Mass. “Consumers were able to spend in May.”
“There was a big fear the $4 gallon of gas would take the lion share of stimulus spending and eat it up,” he said.
The UBS-International Council of Shopping Centers retail sales tally for May rose 3 percent, surpassing the of 1 percent growth estimate.
Wal-Mart said same-store sales rose 3.9 percent, while analysts surveyed by Thomson Financial predicted a 1.6 percent rise. Including fuel sales, same-store sales rose 4.4 percent.
Schoewe said he believes more customers are staying at home to save money, helping to boost sales in its home merchandise business, which had its first increase in same-stores sales in more than two years.
Rival Target, which has a somewhat more upscale clientele, said same-store sales fell 0.7 percent, while analysts expected an 0.2 percent drop. Health care, electronics and perishables were the company’s strongest sales categories in May, while men’s apparel, jewelry, and lawn and patio sales were weakest.
Costco said same-store sales rose 9 percent, ahead of the 6.9 percent analysts were expecting. Results were boosted by food and gas sales, along with the benefit of the weaker dollar, mainly in Canada.
TJX, which operates discount apparel and home furnishing stores including T.J. Maxx and Marshalls, said same-store sales rose 2 percent, edging higher than the 1.8 percent analysts expected.
Department stores reported weaker results, but many still beat analyst expectations and the luxury sector was strong.
J.C. Penney said same-store sales fell 4.4 percent, better than the 5.8 percent analysts expected. Footwear and women’s accessories were strong performers, while jewelry and home categories were softer.
Luxury retailer Saks said same-store sales fell 8.7 percent, while analysts predicted a 7.5 percent drop, but that was mainly due to the shift of a clearance event into April. Combined April and May same-store sales rose 8.6 percent.
Upscale department-store operator Nordstrom reported a 10.9 percent increase in same-store sales, while analysts predicted a smaller 8.1 percent rise.
Mall-based apparel stores continued to struggle. Limited Brands said same-store sales fell 6 percent, missing the 5.5 percent drop analysts expected. The company’s stores include Victoria’s Secret and Bath & Body Works.
Gap’s same-store sales fell 14 percent, hurt by results from its Old Navy Stores. The result was worse than the 9.5 percent decline analysts expected.