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Retail Sales Weaker as Gas Prices, Housing Market Slump Weigh on Consumers

Associated Press
Published | Updated

NEW YORK – Rising gasoline prices and the slumping housing market kept consumers out of stores last month, leaving many of the nation's merchants with disappointing sales results.

As retailers released their April sales figures Thursday, weak performers included Wal-Mart Stores Inc., which recorded a rare drop in business, as well as J.C. Penney Co. and Federated Department Stores Inc.

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"Consumers are feeling pressured by higher gasoline prices and a sluggish housing market, particularly low and middle income consumers," said Ken Perkins, president of RetailMetrics LLC, a research company in Swampscott, Mass.

Analysts had already expected last month to be weak after an early Easter motivated many consumers to do their holiday shopping in March, siphoning away part of April's business. But sales were much softer than expected, raising concerns that retailers will also see disappointing results in the months ahead. Perkins and other analysts say they will be closely watching how May fares since the month will provide a better indication of the health of the consumer.

Wal-Mart reported a 3.5 percent decline in same-store sales, or sales at stores open at least a year. Same-store sales are considered the best indicator of a retailer's performance. Analysts surveyed by Thomson Financial had expected a 1.1 percent decrease.

Wal-Mart warned last month it expected same-store sales in April to be anywhere from unchanged to down 2 percent, but business was much weaker because of disappointing apparel and home goods sales at its Wal-Mart discount chain. Same-store sales at the discount stores were down 4.6 percent, while at the Sam's Club warehouse club division, same-store sales rose 2.5 percent.

The last time Wal-Mart reported a drop in same-store sales was last November,when the retailer posted a 0.1 percent decrease.

Wal-Mart said the slowing economy was a big factor in its sluggish performance. It noted that recent surveys of discount store shoppers show that consumers are increasingly concerned about rising gas prices, which are now averaging over $3 a gallon nationwide.

Wal-Mart also blamed its performance on cold weather and the earlier Easter. It also said product recalls by dog and cat food manufacturers contributed to a slowdown in pet supply sales during April.

The world's largest retailer said it expects May same-store sales to rise 1 percent to 2 percent.

Federated, which operates Macy's and Bloomingdale's, posted a 2.2 percent decline in same-store sales, while analysts forecast a 1.7 percent gain.

Penney said its same-store sales fell 2.7 percent, more than the 0.8 percent analysts expected.

Costco Wholesale Corp. had a 7 percent same-store sales gain, better than the 6.3 percent estimate.

Apparel retailer Bebe Stores Inc. had a 9 percent drop, worse than the 6.6 percent analysts forecast. Wet Seal had a 9.6 percent decline, more than the 8.3 percent estimate.

Gadget retailer Sharper Image Inc., which has been languishing for months, suffered an 11 percent drop in same-store sales. Still, the results were better than the 25 percent decrease analysts expected.