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June 2 (Bloomberg) -- Wal-Mart Stores
Inc. and Federated Department Stores Inc. posted sluggish
sales gains in May, hurt by unseasonably cool weather
and high gasoline prices. Results at retailers including
Nordstrom Inc. and Abercrombie & Fitch Co. beat analysts'
estimates as their fashions drew customers.
Sales at stores open at least a year
rose 2.9 percent, smaller than the average monthly gain
this year, said the New York-based International Council
of Shopping Centers, based on a preliminary tally of 65
chains. Sales at Neiman Marcus Group Inc. jumped 10 percent.
Wal-Mart had a 2.5 percent increase.
Gasoline prices near April's record high
restrained spending and the third straight month of cool
weather hurt sales of items such as swimwear and outdoor
grills at chains including Wal-Mart, the largest retailer.
Sales at luxury chains including Nordstrom surged as upper-income
workers led April wage gains that were the biggest in
eight years.
``The consumer is showing some signs
of resilience, but it's nothing to celebrate,'' said David
Abella, a New York-based analyst with Rochdale Investment
Management, which has $1.4 billion in assets including
Wal-Mart shares. ``There are definitely signs of a slowdown,
and gasoline prices remain high.''
Monthly gains were 3.1 percent on average
in March and April, according to the ICSC, and 3.5 percent
so far this year. Seattle-based Nordstrom climbed 7.4
percent, almost double analysts' average estimate, 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.
Target
Target Corp., the No. 2 U.S. discounter,
beat analysts' estimates with a 5.1 percent gain. The
Minneapolis-based retailer has had higher gains than Wal-Mart
the past 12 months.
``It's another ho-hum month for'' Wal-Mart,
said Lori Wachs, who helps manage about $100 billion at
Delaware Investments in Philadelphia. ``The strong continue
strong, the weak continue weak.''
Wal-Mart, the world's largest retailer,
said sales will climb 2 percent to 4 percent this month.
The retailer said lower- margin food rather than general
merchandise led the sales gains last month. Target expects
a 4 percent to 6 percent gain.
Shares of Bentonville, Arkansas-based
Wal-Mart rose 38 cents to $48.30 at 12:40 p.m. in New
York Stock Exchange composite trading. Nordstrom jumped
$2.75, or 4.5 percent, to $64.10. Shars of Abercrombie
& Fitch, based in New Albany, Ohio, surged $6.36,
or 11 percent, to $64.35, their biggest gain in more than
two years.
Teen
Teen retailers had another strong month.
Abercrombie & Fitch Co., a casual clothing retailer,
had a gain of 29 percent, double the average estimate.
American Eagle Outfitters Inc., which sells apparel at
more than 800 U.S. and Canadian stores, posted a 17 percent
rise, 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. ``And when you are on trend, you see some
good numbers.''
Same-store sales at Gap Inc., the largest
U.S. clothing chain, fell 8 percent. Plano, Texas-based
J.C. Penney, the No. 2 department store chain, said sales
grew 3.5 percent, better than it forecast.
Average earnings per week rose by $4.88
to $542.40 in April, a 0.9 percent increase from March
and the biggest gain since August 1997, according to the
Labor Department. 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.
Gasoline
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.
Federated, Gap, Saks Inc. and AnnTaylor
Stores Corp. were among chains missing estimates. Federated
Chief Executive Terry Lundgren said in a statement that
cool weather hurt sales of warm- weather apparel such
as swimwear and sandals.
Federated, based in Cincinnati, gained
0.8 percent, Saks fell 1.2 percent and AnnTaylor declined
7.1 percent. Limited Brands Inc., based in Columbus, Ohio,
had a 1 percent decline.
``We expect to experience significant
pressure on merchandise margins until we transition to
fall product in late July and August,'' said Gap Senior
Vice President Sabrina Simmons in a statement.
Inventory
Retailers including Ann Taylor have been
carrying too much inventory, necessitating markdowns,
Gabrielle Kivitz, an analyst with Deutsche Bank in New
York, said.
``Retailers that have a lot of color
in their mixture didn't seem to be selling as much,''
said Patricia Edwards, who helps manage about $5.2 billion
at Wentworth, Hauser & Violich in Seattle, including
625,000 Nordstrom shares. ``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.
Cold Weather
``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.
U.S. retail sales rose 2.2 percent in
April and averaged 3.6 percent for the first four months
of the year. In May of 2004 sales climbed 5.7 percent.
It was the 15th hottest May in the past 110 years.
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.
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