May was a month of extremes for the retail business. Wholesale membership clubs like Sam’s Club (NYSE:WMT) benefited from shoppers trying to find cheaper prices on essentials like food and gas, while high-end retailers like Nordstrom (NYSE:JWN) and Saks (NYSE:SKS) fared well because their customers are less likely to be affected by inflationary trends such as the record high gas prices witnessed in parts of the country last month.
But many retailers who fall between those two extremes — companies like Target (NYSE:TGT), Kohl’s (NYSE:KSS), and J.C. Penney (NYSE:JCP) — are feeling the squeeze. With gas prices up 30% year-over-year, in large part due to extreme weather, Americans had significantly less discretionary spending money last month. And because of inclement temperatures around the U.S., May didn’t witness the usual surge in spending on seasonal products. Even the rising year-over-year cost of cotton has played a factor in why mid-level retailers are hurting.
J.C. Penney’s share prices are down 11.26% in the last month, Target down 0.22% over the same period, and Gap Inc. (NYSE:GPS) is down a whopping 18.33% in the last month after posting first quarter earnings 23% below those of their first quarter in 2010, and also witnessing a 1% decline in sales in May. At the extremes are Costco (NASDAQ:COST), expected to post a 10.8% increase in sales for May, Nordstrom with a projected gain of 5.7%, and an estimated 7.2% increase in sales for Saks. Macy’s (NYSE:M) is projecting a sales increase of 5% for June after posting higher than expected gains to the tune of 8.5% in May. Ultimately industry sales figures are expected to increase 3% across the board for May, with big winners buoying the numbers. A surge in sales over the Memorial Day weekend also helped floundering May numbers.
More numbers: Redbook Chain Store Sales were up 3.6% year-over-year while ICSC Retail Store Sales were up 0.4% week-over-week and 2.8% year-over-year.
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