(Adds analyst comments; stock activity; sales from Nordstrom,
By Brad Dorfman
CHICAGO, June 5 U.S. retailers reported a mixed
bag of May sales results on Thursday, with consumers focused on
lower prices and essentials like food, but signs emerged that
tax rebates were helping to spur some spending.
While many discount and warehouse stores topped analysts'
lowered expectations, department store operators continued
their struggles, as U.S. consumers spent cautiously.
Overall, same-store sales rose 2.5 percent, more than twice
the average 1.2 percent increase forecast by analysts,
according to Thomson Reuters data. That compares with a 2.9
percent increase a year earlier.
A total of 58 percent of retailers covered exceeded
analysts expectations, while about one-third missed estimates,
according to Thomson Reuters.
"We have this clear divide in where the strength is and
where it isn't," said Michael Niemira, chief economist for the
International Council of Shopping Centers. "The strength
seemingly was in the less discretionary areas -- like discount,
drugs and wholesale clubs."
Wal-Mart Stores Inc (WMT.N), the world's largest retailer,
posted a better-than-expected 3.9 percent increase in sales at
U.S. stores open at least a year, excluding gasoline sales.
Analysts' average forecast was for a 1.6 percent increase,
according to Thomson Reuters data.
Wal-Mart said it has seen some benefits from the tax
rebates consumers began receiving in late April as part of the
$152 billion economic stimulus package passed by the U.S.
MANY BEAT ESTIMATES
Wal-Mart shares were up more than 3 percent in afternoon
dealings, while retail shares in general, as measured by the
Standard & Poor's Retail Index .RLX, were up almost 1.5
"It looks like stimulus checks are having an impact this
month," said Ken Perkins, president of Retail Metrics, noting
that many retailers were beating Wall Street expectations.
The shopping center group's Niemira forecast a 2.5 percent
to 3 percent same-store sales increase in June, further help by
But analysts also caution that once the stimulus funds are
spent, longer-term issue like high consumer debt and soaring
gasoline and food costs could still hurt sales.
"This is going to be a temporary blip in retail sales and
consumer spending," said Bill Hampel, chief economist at Credit
Union National Association, a trade group.
Costco Wholesale Corp (COST.O), the largest U.S. warehouse
club, said higher prices for gasoline helped it post a 9
percent rise in same-store sales, besting an average Wall
Street estimate of 6.9 percent.
With consumer spending making up 70 percent of the U.S.
economy, retailers' monthly sales reports are closely watched
for signs of how deep the economic slowdown has become.
IT SELLS IF IT'S ON SALE
One higher-end department store chain, Nordstrom Inc
(JWN.N), did beat estimates with a 10.9 percent increase in May
same-store sales -- helped by the shift of a major sale event
to May this year from June last year.
"It's driven by promotion," Sarah Henry, retail analyst at
Sovereign Asset Management, said of the current retail
environment. "People are willing to spend, but only if they
know they are getting a good deal." Sovereign holds Wal-Mart
shares and manages Nordstrom shares for clients.
In addition to the slumping economy, retailers also faced
colder-than-normal weather last month, crimping sales of
warm-weather clothing. It was the coldest May since 2002,
according to Planalytics, and Wal-Mart said sales of seasonal
merchandise that depend on the weather were soft.
BJ's Wholesale Club Inc BJ.N posted a larger-than-
expected 13.4 percent rise in same-store sales, like Costco
helped by higher prices for gasoline. But it said air
conditioners and summer seasonal goods were among its weakest
Among retailers with lower-than-expected sales were
department store operator Bon-Ton Stores Inc (BONT.O), which
reported a same-store sales fall of 9.9 percent compared with
an expected drop of 5 percent, and Victoria's Secret owner
Limited Brands Inc LTD.N, which posted a 6 percent decline,
versus an estimate of down 5.5 percent.
Gap Inc (GPS.N) posted a 14 percent drop, compared with an
average estimate of a 9.5 percent fall.
Teen and children's apparel retailers were among those
beating estimates, with Children's Place Retail Stores Inc
(PLCE.O) up 10 percent, compared with an average estimate of
4.3 percent, and Buckle Inc (BKE.N) up 34.7 percent, compared
with an average estimate of 13 percent.
Department stores other than Nordstrom continued to be hurt
by the weak economy. J.C. Penney Co Inc (JCP.N) same-store
sales fell 4.4 percent -- though that beat the average estimate
of down 5.8 percent -- and Saks Inc SKS.N posted a
worse-than-expected 8.7 percent decline.
(Reporting by Brad Dorfman; editing by Gerald E. McCormick and