Discount Retailers Enjoy Strong Month
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Thursday, May 7, 2009; 11:50 AM
Value-conscious shoppers flocked to discount stores in April, boosting sales at chains such as Wal-Mart and T.J. Maxx, according to data released today.
Wal-Mart said sales at its stores open at least a year -- a key measure of success in retailing known as same-store sales -- rose 5 percent during April compared with the same month last year. The nation's largest retailer attributed the gains in part to the shift of Easter into April but said it also won new customers and improved market share. April marked the seventh consecutive month of sales increases, with strength last month in grocery, health and wellness, entertainment and home, the company said.
Other value players also enjoyed same-store sales growth last month. T.J. Maxx rose 3 percent, Ross jumped 6 percent, and teen retailer Aeropostale skyrocketed 20 percent. After struggling for several months, Target had a 0.3 percent uptick in same-store sales.
"The retail sales declines are finding a bottom, but it's a bumpy bottom," said Frank Badillo, senior economist at consulting firm Retail Forward. The company calculated that industry-wide same-store sales rose 0.9 percent in April compared with the same month last year, up from a 1.9 percent drop in March.
But the picture was not rosy for all retailers. Luxury department stores continued to suffer double-digit declines, with Nordstrom down 11 percent, Neiman Marcus dropping 23 percent and Saks falling 32 percent. In addition, sales at some specialty retailers decreased. Abercrombie & Fitch fell 22 percent, and Limited Brands, which owns Victoria's Secret, was down 6 percent.
"We think retailers are going to continue to have to manage very cautiously and realign their businesses for the future rather than hope for a quick rebound," said Peter Brown, vice chairman of consulting firm Kurt Salmon Associates.
Industry experts said any improvements in retailers' performance was largely driven by better management of prices and inventory rather than an increase in consumer demand. Shoppers remain cautious and are looking out for deals, they said. An expected rise in the unemployment rate will keep the pressure on consumers.
"We have to think that the tales of a recovery here are really overblown," said Craig R. Johnson, president of Customer Growth Partners, a retail consulting firm. "All we're really seeing is a continued flight to value."
