Shoppers cautiously pushed up spending in May
ASSOCIATED PRESS May 31, 2012 9:34AM
NEW YORK — Americans loosened their purse strings in May to update their wardrobes with bright new styles and take advantage of Mother’s Day promotions.
Major retailers including Target Corp., Macy’s Inc. and Limited Brands Inc. all posted bigger-than-expected gains from a year ago. The modest but healthy gains followed a dismal showing in April, when retailers on average posted their weakest performance since November 2009.
“The pent-up demand is continuing to pour out a little,” said Ken Perkins, president of Retail Metrics LLC, a research firm. “I wouldn’t say it’s happening in droves. But consumers are updating their wardrobes.”
The positive results come amid broader indications that the economy is still struggling to recover. The Commerce Department said Thursday that the U.S. economy grew at an annual rate of 1.9 percent in the first three months of the year, which was slower than expected. Growth of 2.5 percent is typically enough just to keep pace with population changes.
The Labor Department on Thursday said the number of Americans seeking unemployment benefits rose last week to a five-week high, evidence that the job market remains sluggish.
And earlier in the week, the Conference Board said its consumer confidence index slipped to 64.9 in May, marking the biggest decline in eight months and ending a period of steady optimism. The figure is now at the lowest level since January.
Only a handful of retailers representing roughly 13 percent of the U.S. retail industry report monthly sales figures based on stores open at least a year, which is a key measure of health because it excludes the impact of newly opened and closed stores. But the figures nevertheless offer a snapshot of consumer spending, which accounts for more than 70 percent of economic activity.
Although modest, the gains in May are considered positive sign because retailers were largely up against strong comparison results from a year ago when the figure on average rose 5.4 percent, according to the International Council of Shopping Centers.
A variety of retailers posted gains:
— Discount retailer Target said its revenue at stores open at least a year was up 4.4 percent as shoppers spent more on its expanded food offerings and its cheap-chic fashions. The performance by the Minneapolis-based company beat the analyst estimate of 3.5 percent, according to Thomson Reuters.
— Limited Brands, the Columbus, Ohio-based parent company of Victoria’s Secret and Bath & Body Works, said its sales were up 6 percent, which topped the 4.7 percent analysts expected.
— TJX Companies Inc., which owns discount store T.J. Maxx, said its sales rose 8 percent, easily topping the 5.3 percent analysts had forecast. The Framingham, Mass.-based company said shopper traffic was up significantly across its departments.
Stores such as T.J. Maxx and Ross Stores Inc. have fared well in the recession, as shoppers increasingly turned to them for brand name items at discounted prices.
— Costco Wholesale Corp. said revenue at stores open at least a year was up 4 percent. That was shy of the 4.3 percent analysts expected, but lower gas prices and unfavorable currency exchange rates dragged down the number. Perkins of Retail Metrics also noted that the Issaquah, Wash.-based wholesale club operator had a particularly high hurdle to meet, given its 13 percent gain from a year ago.
— Macy’s, which runs Bloomingdale’s and its namesake department stores, reported its results on Wednesday. The Cincinnati-based company said its revamped offerings pushed up the measurement 4.2 percent, which was higher than the 4 percent Wall Street expected.