US retailers disappoint as consumers hold back - Wal-Mart offers hope with plan to create jobs

US retailers disappoint as consumers hold back - Wal-Mart offers hope with plan to create jobs
By Alan Rappeport in New York
Copyright The Financial Times Limited 2009
Published: June 4 2009 16:09 | Last updated: June 4 2009 16:09
http://www.ft.com/cms/s/0/0b0e0232-5118-11de-8922-00144feabdc0.html


US retailers suffered a disappointing month of sales in May as shoppers continued to spend conservatively and hunt for bargains.

May was the first month that Wal-Mart, the world’s biggest retailer, opted not to report monthly comparable-store sales. But the company offered its own piece of good news on Thursday, announcing that it would create more than 22,000 new jobs this year in new or expanded US stores.

Other companies offered less hopeful results, however, with high-end stores being hit the hardest. Nordstrom, the chain of department stores, saw its same-store sales drop by 13.1 per cent in May, worse than analysts predicted. Meanwhile, comparable-store sales at Saks plunged by 26.6 per cent last month, compared with estimates of a 14.2 per cent decline, and sales at Dillard’s dropped by 12 per cent.

One positive surprise was Kohl’s, which saw its same-store sales fall by just 0.4 per cent in May against predictions of a 3.8 per cent slide.

“This is unquestionably a period where consumers are trying to stretch every dollar,” said Ken Perkins, president of Retail Metrics, which tracks comparable-store sales data. “Bargains are king.”

According to Retail Metrics, 66 per cent of retailers missed forecasts last month, while 33 per cent beat estimates. Retailers have been hit as consumers continue to retrench amid mounting jobs cuts. In April the US savings rate reached 5.7 per cent, a 14-year high.

Discounters continued to outperform other retailers in May. Comparable-store sales at Ross Stores rose by 4 per cent, and TJX Companies notched a 5 per cent increase. However, Costco, the largest US warehouse club, was not immune from tight spending as its same-store sales were off by 7 per cent.

Shoppers who avoided “discretionary” items continued to spend on staples and necessities. Rite Aid, the drugstore chain, saw an uptick last month, with same-store sales rising by 0.6 per cent.

One demographic that appears to be less fazed by the recession is teenagers. Bucking the penny-pinching trend was Buckle, a Nebraska-based apparel company, which notched a same-store sales jump of 13.4 per cent in May. It was the company’s 22nd consecutive month of double-digit increases.

“They have their finger on the pulse of what rural teens want,” Mr Perkins said.