Retailers From Target to Nordstrom Post Sales Gains (Update1)
Retailers From Target to Nordstrom Post Sales Gains
June 2 (Bloomberg) -- U.S. retailers from Target Corp. to Neiman Marcus Group Inc. posted better-than-expected sales gains in May as bigger paychecks overcame the effect of cold weather on spending.
Wal-Mart Stores Inc., whose lower-income shoppers were restrained by high gasoline prices, said sales at stores open at least a year climbed 2.5 percent. Retailers are expected to report today an increase of as much as 3.5 percent, an estimate by the International Council of Shopping Centers in New York, which tracks results at about 75 chains.
Luxury retailers including Nordstrom led the sales increases, helped by job growth and wage gains that were the biggest in eight years. The third straight month of colder-than- normal weather curbed purchases of seasonal items such as swimwear and outdoor grills at retailers including Wal-Mart.
``Income growth and employment growth continue to improve,'' said Todd Jones of Philadelphia-based PNC Advisors, which manages $50 billion including Wal-Mart shares. ``We'll get hiccups for one reason or another, but over the year we'll see another decent performance in consumer spending.''
Higher-end retailers were among many companies beating analysts' estimates. Dallas-based Neiman Marcus had a 10 percent increase, Seattle-based Nordstrom climbed 7.4 percent, almost double the estimates, and Issaquah, Washington-based Costco Wholesale Corp. gained 5 percent.
Strong sales of accessories, handbags, shoes, cosmetics, juniors' apparel and women's sportswear helped high-end retailers, Merrill Lynch analyst Stacy Turnof wrote in a report this week.
Target
Target Corp., the No. 2 discounter, also beat analysts' estimates with a 5.1 percent gain. The Minneapolis-based retailer continued its streak of outperforming Wal-Mart, whose apparel isn't as fashionable and appealing to shoppers.
Wal-Mart, the world's largest retailer, said sales will climb 2 percent to 4 percent this month. The retailer, which is adding more supermarkets to its stores, said food rather than general merchandise led the sales gains last month.
Shares of Bentonville, Arkansas-based Wal-Mart rose 69 cents to $47.92 yesterday in New York Stock Exchange composite trading. Costco rose 18 cents to $45.56 in Nasdaq Stock Market composite trading and Neiman Marcus gained 35 cents to $96.90. The S&P Supercomposite Retailing Index climbed 1.3 percent to 428.70.
Plano, Texas-based J.C. Penney, the No. 2 department store chain, said its sales grew 3.5 percent, better than it forecast. Talbots Inc., a specialty retailer based in Hingham, Massachussetts, had a 4.1 percent rise and Kohl's Corp. had its third increase in four months with a 0.2 percent rise.
Wages, Gasoline
Wages for high-end consumers grew 6.2 percent in April from a year earlier while the average hourly worker earned 2.7 percent more, which barely kept pace with 2.5 percent inflation, Emme Kozloff, an analyst with Sanford C. Bernstein & Co. in New York, wrote in a May 31 report.
Gasoline prices were 9 percent higher in May than a year earlier after dropping from a record high of $2.28 a gallon in early April in the U.S. Department of Energy survey.
Saks Inc., based in Birmingham, Alabama, and AnnTaylor Stores Corp. were among the few chains whose sales missed estimates. Saks fell 1.2 percent and AnnTaylor declined 7.1 percent. Limited Brands Inc., based in Columbus, Ohio, posted a 1 percent decline.
Retailers including Ann Taylor have been carrying too much inventory, necessitating markdowns, Gabrielle Kivitz, an analyst with Deutsche Bank in New York, said on a May 26 conference call.
Cold Weather
``Retailers that have a lot of color in their mixture didn't seem to be selling as much,'' Edwards said. ``There is a lot of bright orange and pink and green sitting out there. Most women don't want to look fluorescent.''
May is the fifth-busiest shopping month of the year on average, according to ICSC. Sales are usually helped by shoppers snapping up lawn and garden supplies and summer clothing as temperatures rise.
Last month was the coldest May in at least 12 years, according to SDI/Weather Trends, which helps companies forecast consumer demand. April was the coldest since 2000 and had above- normal precipitation. March was the coldest since 2001.
``The weather has just not been conducive to going out and buying T-shirts and shorts and sandals,'' said Patrick McKeever, a retail analyst at SunTrust Robinson Humphrey in Atlanta.
Same-store sales rose 5.7 percent in May 2004, the 15th hottest May in the past 110 years.
Teens
Lower apparel sales in May, the main full-price selling month in the second quarter, may affect earnings estimates for apparel retailers, Merrill Lynch analyst Mark Friedman wrote in a May 31 report.
A few teen retailers continued their strong momentum. American Eagle Outfitters Inc., which sells apparel at more than 800 U.S. and Canadian stores, said May sales rose 17 percent, its smallest gain since last June's 8.7 percent advance.
``When you're a retailer chasing that teen customer base, you're either on trend or you're not on trend,'' Britt Beemer, chairman of America's Research Group, said in a interview May 27. ``And when you are on trend, you see some good numbers.''
Aeropostale Inc., a New York-based teen retailer, said comparable-store sales fell 4.9 percent last month, its second straight decline.
U.S. payrolls have reached new highs this year as businesses bet on economic growth. The U.S. unemployment rate probably fell to 5.2 percent from 5.6 percent a year earlier, a Bloomberg News survey of economists indicates.
The U.S. economy added 274,000 workers in April, exceeding economists' expectations. Through April the economy has added an average 211,000 jobs a month this year, less than the 238,000 a month from 1996 through 2000, the last five years of the previous expansion.
To contact the reporter on this story: Cotten Timberlake in New York at ctimberlake@bloomberg.net; Greg Wiles in San Francisco at grwiles@bloomberg.net.
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