June 5, 2009
US retailers suffered a disappointing month of sales in May as shoppers continued to spend conservatively and hunt for bargains.
May was the first month that Wal-Mart, the world’s biggest retailer, opted not to report monthly comparable-store sales. But the company offered its own piece of good news on Thursday, announcing that it would create more than 22,000 new jobs this year in new or expanded US stores.
Wal-Mart, which employs 2.1m workers around the world, has said that will open 142 to 157 new stores in the US this year. It has not said it it will eliminate any store-level workers, but in February it announced that it would eliminate up to 800 jobs at its Arkansas headquarters. Last year the company created 33,000 jobs in the US.
”During this difficult economic time, we’re proud to be able to create quality jobs for thousands of Americans this year,” Eduardo Castro-Wright, head of the company’s US stores, said.
Last month Wal-Mart said it would abandon the retail tradition of reporting monthly same-store sales figures in favour of focusing on its longer term strategy.
Other companies may wish to follow suit, as many offered less hopeful May sales results on Thursday, with high-end stores continuing to be hit the hardest. Nordstrom, the chain of department stores, saw its same-store sales drop by 13.1 per cent in May, worse than analysts predicted. Meanwhile, comparable-store sales at Saks plunged by 26.6 per cent last month, compared with estimates of a 14.2 per cent decline, and sales at Dillard’s dropped by 12 per cent.
One positive surprise was Kohl’s, which saw its same-store sales fall by just 0.4 per cent in May against predictions of a 3.8 per cent slide.
“This is unquestionably a period where consumers are trying to stretch every dollar,” said Ken Perkins, president of Retail Metrics, which tracks comparable-store sales data. “Bargains are king.”
According to Retail Metrics, 66 per cent of retailers missed forecasts last month, while 33 per cent beat estimates. Retailers have been hit as consumers continue to retrench amid mounting jobs cuts. In April the US savings rate reached 5.7 per cent, a 14-year high, while the unemployment rate climbed to 8.9 per cent, the highest level in a quarter century.
Discounters continued to outperform other retailers in May. Comparable-store sales at Ross Stores rose by 4 per cent, and TJX Companies notched a 5 per cent increase. However, Costco, the largest US warehouse club, was not immune from tight spending as its same-store sales were off by 6 per cent, and Target’s sales disappointed again.
Shoppers who avoided “discretionary” items continued to spend on staples and necessities. Rite Aid, the drugstore chain, saw an uptick last month, with same-store sales rising by 0.6 per cent.
One demographic that appears to be less fazed by the recession is teenagers. Bucking the penny-pinching trend was Buckle, a Nebraska-based apparel company, which notched a same-store sales jump of 13.4 per cent in May. It was the company’s 22nd consecutive month of double-digit increases.
“They have their finger on the pulse of what rural teens want,” Mr Perkins said.
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