In results analysts called disappointing, same-store sales rose in May by about 2.6 percent.
The early months of the year saw consumers spend based on pent-up demand. But high unemployment and other pressures seem to be bringing that run to an end. There are indications that the jobs report coming Friday will be strong with perhaps more than 500,000 jobs added in May. But the unemployment rate will not move much and should still be near 10 percent.
In addition, consumer credit is less available and the housing market remains problematic. Low unemployment, cheap credit and rising housing values all helped drive consumer spending during the boom years. Without robust recoveries in one or more of those areas, it will be difficult to sustain a recovery in consumer spending.
Retailers, in general, said sales were slow early in the month and reported differing levels of spending on discretionary items. Despite that, retailers are expected to report higher sales for the month. The erratic results follow a strong holiday season and start to the year, when consumers showed a willingness to spend again and even pay closer to full price.The results validate the posture many retailers adopted last month when reporting first-quarter results. While many reported strong growth, companies restrained from being overly optimistic for the full year.
Retail Forward and Retail Metrics recorded the gain as 2.7 percent. ICSC said sales rose 2.6 percent.
ICSC's tally shows that same-store sales rose 2.6 percent in April.
ICSC's numbers are based on 31 retailers. In the commentary in its monthly report, ICSC said:
The monthly performance was negatively impacted by cooler‐than‐normal temperatures, which pared some seasonal demand, and a calendar‐shift in the week Memorial Day sales fell (May 25, 2009 vs. May 31, 2010), which pushed some holiday sales into the June reporting period.However, the return of warm weather in late May helped sales of seasonal goods in the final week of the May reporting period. Bon‐Ton's president echoed this view, observing that his company's sales in the final week of May strengthened, reflecting the return of more seasonable warmer weather. The slower momentum in May also was affected by the Memorial Day sales shift that ICSC Research estimated held down May sales by about 1 percentage point industry wide compared with the prior year's May.
Here are ICSC's monthly same-store sales year-over-year changes, not seasonally adjusted, going back to 1993.
(Click for larger image.)
Here is ICSC's index of same-store sales, seasonally adjusted, going back to 1992.
(Click for larger image.)
According to Retail Forward, sales-weighted same-store sales excluding Walmart increased 2.7 percent in March for the 30 retailers that reported numbers. (A pdf with each retailer's results can be downloaded here.) Frank Badillo, senior economist at Retail Forward, said in a statement, These results provide some sign that the retail recovery will persist despite wealth declines,
economic uncertainties and shifting shopper behavior.
Retail Metrics, meanwhile, reported that same-store sales increased 2.7 percent. Overall, the firm counted 20 chains posting gains, one was flat and 14 posted declines.
According to the firm's monthly report:
With unemployment at stubbornly high levels and weekly claims running in the 450k region, consumers pull back the reins on what looked like a fledgling spending recovery in the first quarter. After posting a soft 0.8% gain in April, which missed expectations, our Retail Metrics SSS index posted a disappointing 2.7% gain in May, which was 130 bp below initial May comp expectations at the start of the month and 20 bp short of final estimates.