May Comp Gains Dramatic at Upscale Chains

By Don Hogsett -- Home Textiles Today, 6/5/2006 12:00:00 AM

New York —

With upbeat consumers spending freely — at least those who could afford to fill up their tanks and still have something left over — American retailers reported a second straight month of solid gains.

The Johnson Redbook Index, which tracks same-store sales for leading retailers, said comps climbed higher by 4.3% for the 59 retail companies it tracks, following an even better 6.7% gain during April.

But the cheer only spread so far, and while upstairs retailers mostly took it to the bank, others struggled. Even Wal-Mart, which caters largely to the nation's low-income consumers — those hardest hit by prices at the pump, had a tough time of it. Same-store sales were up just 2.0%, at the low end of its original forecast of 2% to 4% growth.

Target, one of Wal-Mart's biggest rivals, goes after a more upscale consumer, and saw its same-store sales rise almost three times as fast, by 5.7%.

And as long as gas prices stay high, it could spell tough sledding ahead for the world's largest retailer. “Fuel prices continue to be a top concern for our customers,” said Wal-Mart executive vp and cfo Tom Schoewe. “We believe that our customers are consolidating their store visits and focusing their spending on consumables — a trend that we have been seeing since Easter.”

Among the biggest winners, some were predictable, like perennial heavy-hitter Costco with its double-digit gain. But a big surprise was the unusually strong performance at some department-store retailers, with same-store sales at JCPenney stores jumping up by 11.1%, and Federated soaring by 9.2%.

Winners and Losers

May same-store sales for key retailers
Four weeks ended May 27^a, (dollar amounts in millions)