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The Honolulu Advertiser
Posted on: Friday, May 5, 2006

Gas prices fail to slow retail sales

By Leslie Earnest
Los Angeles Times

What gas prices?

Shoppers spent freely in April, boosting retail sales 6.6 percent, the strongest gain in more than two years. Buoyed by a late Easter and particularly warm spring weather, sales at stores open a year or more rose to $50.4 billion, according to the International Council of Shopping Centers' tally of 59 chains nationwide.

A growing job market and rising wages helped numb the pain at the pump, economists said. But consumers are becoming increasingly jittery about high gasoline prices, which eventually could slow sales. Rising interest rates and signs of weakening in the housing market pose additional concerns.

"Consumers are still spending aggressively," said Scott Hoyt, an economist with Economy.com, a research and forecasting company in West Chester, Pa.

"I think we can see the seeds of the slowdown coming," Hoyt said.

Most retailers didn't see it in April, when about two-thirds beat analysts' expectations, according to Thomson Financial. Drugstores, discounters, teen retailers and department stores all logged solid gains.

Wal-Mart Stores Inc., the world's largest retailer, notched a 6.8 percent increase in sales at stores open at least a year, 1.1 percentage points higher than expected.

Competitor Target Corp. saw sales jump 10.4 percent, in line with predictions. That was Wal-Mart's highest same-store sales gain since August 2003 and Target's strongest since April 2000. Both said they expected smaller advances this month.

About 1.5 percentage points of the industry's monthly 6.6 percent gain was attributable to Easter's falling in April this year instead of March, said Michael Niemira, chief economist for the shopping center group.

But not everybody was toasting the Easter bunny.

Sharper Image Inc., the San Francisco-based seller of air purifiers and other gadgets, was one of the big losers, with sales plunging 32 percent, more than twice the 14 percent that analysts were expecting.

Gap Inc. parent of 3,000 Gap, Old Navy and Banana Republic stores slipped 3 percent.

Macy's parent, Federated Department Stores Inc., saw sales slip 0.8 percent, about half the anticipated decline. Nordstrom Inc. posted a 7.3 percent increase, topping the 4.8 percent estimate.