Retailers racked up respectable sales in May, despite chilly spring weather, while stores catering to teens and big spenders continued to surpass Wall Street's expectations, a shopping center group said Thursday.
Sales at stores open at least a year rose to $50.1 billion, an increase of 2.9% from May 2004, according to the International Council of Shopping Centers' nationwide tally of 67 major chain stores. The group was expecting an increase of 3% to 3.5%.
Strong results from Bebe Stores Inc., Nordstrom Inc. and Abercrombie & Fitch Co. pushed those companies' stock prices to 52-week highs.
Bebe, based in Brisbane in the Bay Area, logged a 40.3% increase in same-store sales, considered a key indicator of a retailer's strength.
The chain has been wowing analysts for months as it continues to attract young women to its aisles.
"All month long, it seems they get product in and it flows through," said analyst Elizabeth Pierce of Sanders Morris Harris, who visits the stores regularly. "It's just absolutely amazing to me."
Bebe's stock rose $3.63, or 9%, to $42.57.
Teen retailer Wet Seal Inc. offered the most surprising results. The Foothill Ranch-based retailer logged a 56.9% increase, almost 33 percentage points more than analysts were expecting and one of the highest postings of any retailer in the survey in the last seven years.
Although impressive, analysts cautioned, Wet Seal's strong results came on the heels of two weak years.
The number "almost looks exaggerated because of that," said Jeffrey Van Sinderen, an analyst with B. Riley & Co. in Los Angeles. Wet Seal, which teetered near bankruptcy last fall, has since closed more than 150 stores.
The company's stock rose 70 cents, or 17%, to $4.90.
Some recent trends continued unabated, as teen retailers collectively posted an 11.7% gain and sales at sellers of luxury goods rose 7.1%. Department stores increased 1.3% as a group after a 3.3% gain in April.
San Francisco-based Gap Inc., which operates about 3,000 Gap, Old Navy and Banana Republic stores, saw same-store sales sink 8%.
Its stock fell 11 cents, or 0.5%, to $21.24.
Gasoline prices, lower than in previous months but still higher than they were last year, may have hurt some companies catering to low-income households, analysts said.
But the effects of shifting pump prices remained far from clear, as discounters and dollar stores turned in mixed results. Among discounters, Wal-Mart Stores Inc. advanced 2.5% and Target Corp. showed a 5.1% increase.
Warehouse club retailer Costco Wholesale Corp. posted a 4.4% gain in sales.
Weather appeared to be a bigger factor than gas. The coldest May in 22 years curbed spending on seasonal goods, such as garden supplies, outdoor furniture and air conditioners, said Michael Niemira, chief economist for the shopping center group.
May is not the key month in the quarter, a designation that falls to June, when retailers rake in about 39% of their sales, analyst Bill Dreher of Deutsche Bank noted in a report. But poor May sales can force retailers to slash prices and take a hit to profits, analysts note.
Still, if the weather heats up as expected this month, and gasoline prices don't shift upward, retailers could get a break, said Niemira, who predicted a same-store sales increase of 3% to 4% for June.
"If weather was the catalyst for softness," he said, "it may be the catalyst for strength in June."
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Percentage change from a year earlier in sales at stores open at least one year:
*--* Company % change Wet Seal +56.9% Bebe +40.3 Nordstrom +7.4 Ross +7.0 Target +5.1 Gottschalks +4.2 J.C. Penney +3.5 Wal-Mart +2.5 Guess +1.9 Federated +0.8 Pacific Sunwear +0.4 Limited Brands --1.0 Hot Topic --1.9 May --2.9 Gap --8.0
Sources: Times wire services, company reports
Los Angeles Times