Lackluster sales reports from most retail major chains showed that consumers werent quite ready to loosen their purse strings yet, analysts said Thursday.
“We were expecting, across the board, a little bit better numbers than what we saw today,” said Gregg Clark, vice president of consumer goods and services for Cap Gemini Ernst & Young in New York.
His firm has seen some improvement in consumer sentiment, Clark said, but the May reports indicate shoppers may be holding back. Cool weather in the Midwest and chilly rain in the Northeast also held down sales, some retailers said.
In addition, the Labor Department reported Thursday that the number of American workers filing new claims for jobless benefits rose to a five-week high last week.
Bank of Tokyo-Mitsubishi Ltd.’s sales tally of 76 stores open at least a year was up 2 percent, compared with a 3.5 percent gain in the year-ago period. That was higher than the 1.5 percent anticipated and a bit above the average 1.5 percent pace seen since last August.
“It is a little better than expected, but we still havent broken out of a sluggish pace yet,” said Michael P. Niemira, vice president of Bank of Tokyo-Mitsubishi.
Niemira said he expects sales at stores open at least a year to be up 1.5 percent to 2.5 percent in June. That type of measurement, known as same-store sales, is considered a key indicator of retail health.
Many retailers, including Kohl’s Corp., reported sales were little changed for the four weeks ended May 30, compared to the same period a year ago. The result was at the low end of the company’s plan.
ShopKo Stores Inc., a Green Bay discount chain, reported a 3.1 percent decline; and Saks Inc., the Birmingham, Ala., parent for the Boston Store and Younkers, said sales were off by 1.6 percent last month. The Saks results include a decline of 0.2 percent for the regional department store group and a 3.8 percent drop at the upscale Saks Fifth Avenue division.
Kohl’s told analysts that in-store traffic was up by 3 percent, but the average transaction amount was down by about the same percentage, resulting in a flat month, said David Cumberland, an analyst with Robert W. Baird & Co. The stepped-up level of promotions got more people into the stores, Kohl’s said, but the sale prices brought down the company’s top line.
Gap Inc., continuing its turnaround, had one of the strongest gains for the month, 10 percent, against a 9 percent decline a year ago. J.C. Penney saw sales increase by 3.2 percent, compared to a 5.1 percent drop in May 2002.
Minneapolis-based Target Corp. reported sales up just 0.7 percent, as planned. The number included a gain of 1.4 percent at its Target discount chain, and declines of 3.8 percent at Mervyn’s, a California division that is similar to Kohl’s, and 3 percent at its Marshall Field’s division.
Analysts say June will be a more important month for retailers, as far as impact on second-quarter earnings.
A willingness to look ahead could account for gains in retail stocks Thursday in the face of gloomy sales reports. Kohl’s shares closed up 87 cents, at $54.92; ShopKo finished up 98 cents, at $14.16.
“It’s more of a glass half-full approach,” said Cumberland, noting that analysts are more focused on improvements they hope to see in the second half of the year. Same-store sales will look better in the second half because they will be up against weak 2002 results.
While it’s too early for investors to worry about next quarter’s earnings, shoppers can look forward to finding bargains this summer on apparel, home decor and outdoor furniture, as retailers slash prices to move inventory, Cumberland said.