NEW YORK (AP) — Retailers reported muted May revenue growth on Thursday as bad weather and worry over the rising cost of living held back shoppers’ demand for spring and summer merchandise.
After a strong spring, consumers seemed to be shrugging off rising prices. But stores are now reporting that their shoppers are finally feeling the pain of rising prices for food like dairy and meat and gas prices that are more than $1 higher per gallon than a year ago.
Higher costs are “finally taking a bite and affecting sales,” said Ken Perkins, president of research firm Retail Metrics. “It definitely raises the caution flag going into the summer.”
Of 24 retailers, about 60 percent missed expectations and 40 percent beat expectations, according to a poll by Thomson Reuters.
“Our guests continue to shop cautiously in light of higher energy costs and inflationary pressures on their household budgets,” Target Corp. CEO Gregg Steinhafel said.
Target’s revenue at stores open at least a year rose 2.8 percent, below the 3.5 percent analysts expected, according to FactSet. The measure is considered a key indicator of a retailer’s health because it excludes results from stores opened or closed during the year.
Charming Shoppes, the parent of clothing chains Lane Bryant and Fashion Bug, also reported shoppers were holding back because of rising food and gas prices.
Stores that cater to middle- and lower-end consumers are feeling the pain far more than more expensive stores. Saks Inc. reported revenue in stores open at least one year jumped 20.2 percent, far higher than the 6.5 percent analysts expected, as shoppers bought designer clothing, shoes, handbags and accessories.
The figure rose 7.4 percent at Nordstrom Inc., also beating expectations.
In the department store sector, Macy’s was another standout. The company’s revenue figure rose 7.4 percent, ahead of expectations, and the company raised its second quarter guidance.
But other department stores fared worse. Dillard’s, J.C. Penney and Kohl’s all missed expectations.
Weather could have weighed on results. May was unseasonably cold and wet, and there were floods along the Mississippi and Ohio Rivers and 350 tornadoes reported, according to weather research firm Planalytics.
Summer could be even more difficult, because the surging price of cotton is expected to start showing up in clothing prices.
Prices have been creeping up already, Perkins said, but could rise anywhere between 5 percent to 20 percent this summer.
Higher prices plus what appears to be a slowing job market and moribund housing market “sets up potential slow sales this summer,” Perkins said.
Warehouse clubs benefited from rising gas prices, partly because those stores use discounted gasoline to lure shoppers into buying memberships. Costco Wholesale Corp.’s revenue in stores open at least a year rose 13 percent, also helped by the weaker dollar. BJ’s Wholesale Club’s results rose 7.4 percent.
Gap’s results fell 4 percent, with a decline across all brands including Gap, Banana Republic and Old Navy.
Limited Brands Inc., which owns Victoria’s Secret and Bath and Body Works, reported revenue in stores open at least one year rose six percent, slightly short of expectations.
In the teen sector, The Buckle Inc. and Zumiez beat expectations, but Hot Topic and Wet Seal fell short of Wall Street estimates.
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