Posted at 4:44 a.m., Thursday, May 10, 2007
Retailers post weak April sales
Associated Press
NEW YORK The outlook for consumer spending in the coming months grew dimmer today after big retailers stumbled in April, their sales hurt by rising gasoline prices and the weak housing market.As retailers released their monthly sales figures today, weak performers cut through all segments of the industry and included Wal-Mart Stores Inc., which recorded a rare drop in business, as well as Abercrombie & Fitch Co. and Federated Department Stores Inc.
"Consumers are feeling pressured by higher gasoline prices and a sluggish housing market, particularly low and middle income consumers," said Ken Perkins, president of RetailMetrics LLC, a research company in Swampscott, Mass.
Analysts had already expected last month to be weak after an early Easter motivated many consumers to do their holiday shopping in March, siphoning away part of April's business. But sales were much softer than expected, raising concerns that retailers will also see disappointing results in the months ahead.
The UBS-International Council of Shopping Centers sales tally posted a decline of 2.3 percent, the biggest drop since the index started tracking the data. The tally is based on same-store sales or sales at stores open at least a year, which are considered a key indicator of retailers' health. For the combined March and April months which provides the best read on the spring selling season, the tally was up a modest 1.8 percent, below the 2.8 percent forecast.
While analysts will be closely watching how May fares since the month will provide a better indication of the health of the consumer, concerns are rising that shoppers can no longer bear the weight of the economy's woes.
"The slowdown is at hand," said Michael P. Niemira, chief economist at the International Council of Shopping Centers.
Wal-Mart reported a 3.5 percent decline in same-store sales. Analysts surveyed by Thomson Financial had expected a 1.1 percent decrease.
Wal-Mart warned last month it expected same-store sales in April to be anywhere from unchanged to down 2 percent, but business was much weaker because of disappointing apparel and home goods sales at its Wal-Mart discount chain. Same-store sales at the discount stores were down 4.6 percent, while at the Sam's Club warehouse club division, same-store sales rose 2.5 percent.
The last time Wal-Mart reported a drop in same-store sales was last November,when the retailer posted a 0.1 percent decrease.
Wal-Mart said the slowing economy was a big factor in its sluggish performance. It noted that recent surveys of discount store shoppers show that consumers are increasingly concerned about rising gas prices, which are now averaging over $3 a gallon nationwide.
Wal-Mart also blamed its performance on cold weather and the earlier Easter. It also said product recalls by dog and cat food manufacturers contributed to a slowdown in pet supply sales during April.
The world's largest retailer said it expects May same-store sales to rise 1 percent to 2 percent.
Target Corp. suffered a 6.1 percent decline in same-store sales, in line with the 6.2 percent estimate. Target blamed the dropoff on a sales shortfall during the first two weeks of the month, and an earlier Easter holiday.
However, the company said it remains on track to meet its earnings goals for the year.
Costco Wholesale Corp. had a 7 percent same-store sales gain, better than the 6.3 percent estimate.
Federated, which operates Macy's and Bloomingdale's, posted a 2.2 percent decline in same-store sales, while analysts forecast a 1.7 percent gain.
Penney said its same-store sales fell 2.7 percent, more than the 0.8 percent analysts expected.
Among upscale retailers, Nordstrom Inc. recorded a 3.3 percent gain in same-store sales,which was below the 4.2 percent estimate. Saks Inc. had a robust 11.7 percent gain in same-store sales, above the 6.7 percent estimate.
Gap Inc., whose problems led to the departure of its CEO in January, suffered a 16 percent drop in same-store sales, much worse than the 7.1 percent decline that analysts had expected.
Limited Brands Inc. had a 1 percent decline in same-store sales, worse than the 1 percent gain that analysts had expected.
Abercrombie & Fitch posted a 15 percentd rop in same-store sales, much worse than the 4.7 percent decline Wall Street projected.
Apparel retailer Bebe Stores Inc. had a 9 percent drop, worse than the 6.6 percent analysts forecast. Wet Seal had a 9.6 percent decline, more than the 8.3 percent estimate.
Gadget retailer Sharper Image Inc., which has been languishing for months, suffered an 11 percent drop in same-store sales. Still, the results were better than the 25 percent decrease analysts expected.