Retailers Sales Rise Steadily, In Line With Forecasts
Major retail chains including Costco Wholesale and Victoria's Secret on Thursday reported sales increases for May that were generally in line with Wall Street's expectations, suggesting consumer spending continues to improve moderately.
Costco said sales at stores open at least a year, or same-store sales, rose 5 percent last month, coming in slightly below Wall Street forecasts because of lower gasoline prices. Fresh food and tools for home repair were stand out categories, Costco said.
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Victoria's Secret parent company L Brands reported companywide same-store sales rose 3 percent, and the company, which also owns Bath & Body Works, expects a similar jump in June. Analysts were expecting a 3.2 percent rise.
Same-store sales for the 10 U.S. chains that have reported May sales rose 3.9 percent. Wall Street was expecting them to report a 3.7 percent increase in same-store sales for the four weeks ended June 2. Gap reports Thursday afternoon.
The S&P Retail Index was up 0.1 percent Thursday morning.
A drop in gas prices, a steadily improving job market, higher home values, and a jump last month in the stock market have contributed to continued improvement in consumer mood and willingness to spend, an analyst with Accenture said.
"People who are in a job are comfortable with what they have, and stability leads to optimism," Chris Donnelly, a managing director at Accenture, told Reuters.
The economic recovery is still not all that robust: private employers added 135,000 jobs in May, the ADP National Employment Report showed on Wednesday, which was much less than expected.
So shoppers are still cautious and price conscious, Donnelly said.
At its peak in 2006, the monthly same-store sales index included 68 companies ranging from Wal-Mart Stores to Starbucks, making it a much more significant gauge of consumer spending than the current index of 11 companies.
The International Council of Shoppers Centers expects same-store sales to rise 3 percent to 3.5 percent in June, a similar pace to recent months.
Costco, which offers its members deep discounts on everything from gas to gardening tools, has been one of the big winners in the recession and slow recovery.
Stein Mart, a chain that offers low cost fashion, has also benefited: its same-store sales were up 8.2 percent, well above the 2 percent rise analysts projected.
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American Apparel continued its turnaround and reported a 10 percent jump in same-store sales, the biggest gain among the companies reporting.
In addition to Fred's, two other chains reported a drop in May same-store sales. Cato, said same-store sales fell 2 percent, a smaller drop than expected.
Rite Aid same-store sales fell 1.5 percent, largely because of the introduction of several generic drugs, which are less expensive for consumers, in the last year. But sales of general merchandise like toothpaste and greeting cards at Rite Aid rose.