By William Spain
Retail stocks headed lower early Thursday, as the sector's main
indicator slipped in the wake of mixed but mostly down May sales
results.
The S&P Retail Index (RLX) declined about 2% to 332.36
In some cases, improved consumer confidence, along with a
slowing rate of decline in retailers' spending and various positive
economic indicators, seemed to help offset the absence of last
year's rebate checks, a soaring unemployment rate and an uptick in
fuel prices.
Among the retailers reporting positive same-store-sales results
early Thursday were Buckle (BKE), which gained 13.4% in the key
metric, and Walgreen (WAG), which posted a 1% increase. Shares of
Buckle were down almost 5% while Walgreen slipped more than 1%.
On the downside, Children's Place (PLCE) reported a 9% drop in
same-store sales as opposed to Wall Street's view of a 0.1%
decline; Wet Seal (WTSLA) sales dropped 8.4%. Shares of Children's
Place fell more than 7%, and Wet Seal gained 4%.
Meanwhile, Costco Wholesale (COST) said that same-store sales
fell 7%, while total sales fell 5% to $5.47 billion. That compares
to the analyst view of a same-store-sales drop of 6.4%.
Shares of Costco fell about 4%.
Overall, retailers' May same-store sales - those at outlets open
at least a year - were expected to decline 4.1% on average,
compared with an average drop of 4.5% so far this year, according
to Thomson Reuters' survey of 30 retailers. That compares with a
1.1% increase in the year-earlier month.
Every category save one - drugstores - was expected to post
same-store-sales declines.
Craig Johnson, president of Customer Growth Partners, a
consultancy, cautioned that investors shouldn't read too much into
the results, as they represent less than 10% of the total retail
sector.
Still, he noted, "from the results we have seen out of
discounters, consumers are focusing on absolute necessities. They
are buying much closer to need and making more trips with smaller
baskets."
By way of illustration, Target (TGT) said May same-store sales
fell 6.1%, while analysts had expected the Minneapolis retailer's
same-store sales to fall 4.3%. And total sales for the month of May
were below expectations, the company said
Target shares slid 2.6%.
These are "all signs of a highly stressed consumer," Johnson
said. "And the department-store sector is exceptionally
stressed."
Certainly Macy's (M) is: The chain said its May same-store sales
fell 9.1%, slightly better than analysts' expectation for a 9.3%
decline. Macy's also reported total sales of $1.74 billion for the
four weeks ended May 30, a decrease of 9.5%.
Macy's shares fell 5%.
The significance of monthly combined results has waned after
retail giant Wal-Mart Stores Inc. (WMT), which had represented a
weighting of about 51% in the Thomson index, said last month that
it will stop reporting monthly sales.
Instead of reporting May numbers, Wal-Mart said Thursday that it
will create more than 22,000 jobs in the U.S. in a variety of
management and line positions as it expands stores and opens new
ones. The jobs the company said it would seek to fill include store
managers, human-resources managers, pharmacists, cashiers and
customer-service and sales staff.
Shares of Wal-Mart were off less than 1%.
-William Spain; 415-439-6400; AskNewswires@dowjones.com