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Discounters, Apparel Retailers See Modest Sales Gains in May

June 06, 2003|From Reuters

NEW YORK — U.S. retail sales brightened in May as shoppers snapped up clothing and hunted for bargains after months of bleak sales during a harsh winter and wet early spring in much of the country.

Analysts had expected a lackluster performance as many retailers have reported overflowing inventory and have cut prices. Widespread discounting fueled sales last month, but analysts said it also probably hurt profits.

Bank of Tokyo-Mitsubishi said Thursday that its index of 72 retailers showed a 2% rise in May same-store sales, or sales at stores open at least a year. That beat its forecast of a 1.5% increase.

Discounters such as Wal-Mart and warehouse clubs such as Costco fared well in May as cash-strapped consumers tried to save on apparel and staples.

"A lot of the selling looked like inventory clearing, and no one's expecting a great summer, so you might as well clear merchandise out," said Jordan Kaplan, a business professor at Long Island University in New York.

Several specialty apparel retailers, including California companies Gap Inc. and Pacific Sunwear of California Inc., reported strong sales. San Francisco-based Gap posted a 10% jump in May same-store sales.

Pacific Sunwear said overall same-store sales rose 13.2%, including a 12.5% increase at its PacSun stores and a 20% jump in sales at its urban-apparel chain, d.e.m.o. The May sales results prompted the Anaheim-based company to raise its second-quarter earnings outlook to 20 cents a share, up from its previous forecast of 19 cents.

Wal-Mart Stores Inc., the world's largest retailer, said May same-store sales increased 2.1%, in line with its expectations. It forecast a rise of 2% to 4% for June. Rival discounter Target Corp. posted a May rise of less than 1% but forecast growth of 1% to 3% in June.

Costco Wholesale Corp. reported a 4% increase in May same-store sales. It forecast a 3% to 5% rise in June.

May same-store sales rose 3.2% at J.C. Penney Co. Rival Sears, Roebuck & Co. posted a decline of 1.9%, its 21st consecutive monthly drop, although the decline was smaller than expected.

Federated Department Stores Inc., parent of Macy's and Bloomingdale's, reported a decline of less than 1%, which was better than expected, and forecast a 1% to 2% decline for June.

The news wasn't sunny for everyone. Foothill Ranch-based Wet Seal Inc. said May same-store sales fell 25%.

"We are looking forward to better things to come in the second half of the year," Wet Seal Chairman Irving Teitelbaum said. The company last week named Peter Whitford as its chief executive.

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