Better Jobs Market Boosts May '04 Sales
Economists worried rising gas prices would take a large bite out of retail sales in May. While gas prices show no sign of coming down—for the week ending May 31 they averaged $2.05 per gallon, according to the U.S. Energy Information Agency—many retailers breathed sigh of relief last month because same-store sales for the retail sector did better than expected.
The New York–based International Council of Shopping Centers (ICSC) reported same-store sales climbed 5.7 percent, and also confirmed a good month for apparel chain stores with their same-store sales climbing 5.3 percent.
An improving job market, specifically the manufacturing sector, blunted the impact of skyrocketing fuel prices, according to Michael Niemira, chief economist for the ICSC. More than 32,000 manufacturing jobs were created in May, following two months of high jobs growth.
“Ultimately income will drive sales,” Niemira said. “If manufacturing continues to improve, we’ll get ahead of gas price hikes.”
Luxury and specialty retailers experienced a good May. Chico’s FAS Inc., based in Fort Myers, Fla., reported a 17.9 percent increase in their same-store sales. The comp sales earned by San Francisco–based Gap Inc. increased to 6 percent, an increase by half from their same-stores sales of 3 percent in April.
Department stores such as the Seattle-based Nordstrom, Inc. reported 9.4 percent comps, slightly down from 10 percent in April, and Birmingham, Ala.–based Saks Inc. climbed 9.4 percent, a couple points above their April showing of 7.6 percent.
May, however, didn’t bring spring flowers for every retailer. One third of the 21 retailers charted in this index reported negative same-store sales last month. Most of these businesses such as Foothill Ranch, Calif.–based Wet Seal, Fresno, Calif.–based Gottshalks Inc. and Hoffman Estates, Ill.–based Sears, Roebuck & Co consistently showed weakness this year. However, City of Industry, Calif.–based Hot Topic, Inc. reported negative comp store sales for the first time in 2004.
Jim McGinty, Hot Topic’s chief financial officer, blamed a shift of Memorial Day weekend business into June for the pop culture company’s negative comp number of -0.5 percent. The shift represented one half point of comp sales. If these crucial sales were counted in May, Hot Topic’s comp sales would have stayed in the black, according to McGinty.
Niemira forecasts a June without gloom. Retail sales should rise 5 to 6 percent. —Andrew Asch
