NEW YORK — Caught in the maelstrom of higher gas and food prices, Americans — even more affluent ones — are seeking shelter in wholesale clubs and discount apparel chains.
Low-price operators Costco, Wal-Mart and TJX reported better-than-expected sales Thursday, while traditional apparel chains J.C. Penney and Limited Brands struggled.
“The smart shopper is in full bloom,” said Craig R. Johnson, president of consultancy Customer Growth Partners. “They’re looking to stretch their household budgets, and if you can get decent-quality merchandise, why pay full price?”
“Smart shopping” is sweeping through all wage classes, analysts say, and it could spell trouble for retailers’ profits and the economy too.
To lure customers, apparel chains are discounting more.
First-quarter profits are slated to be down by 14.9 percent, according to Ken Perkins, president of RetailMetrics LLC, a research company in Swampscott, Mass. That compares with a projection in January of 5.3 percent profit growth.
Retailers’ first quarter ended in April, and companies will start reporting their financial results next week.
“Consumers are focusing on value and price points and stretching their dollars,” Perkins said. “They are feeling the pinch on multiple fronts.”
He and other analysts expect only a modest rise in sales in May and June as consumers spend tax-rebate checks that are starting to arrive.
“There’s too much going on” in the economy, Perkins said. He and others expect shoppers to use the extra cash to pay down debt and catch up on utility and food bills.
That could be a disappointment for the Bush administration, which had hoped the checks would give the economy a much-needed lift.
Because of an extra shopping day last month compared with a year ago, the retail industry expected sales to rise in April.
The UBS-International Council of Shopping Centers retail sales tally for the month rose 3.6 percent. The figure surpassed the 2 percent growth estimate and marks the biggest gain since March 2007, when the index was up 5.9 percent. But the April performance followed a 0.5 percent decline the previous month, the weakest March in 13 years. Sales growth for the two months combined was 1.6 percent, in line with the average sales growth since the beginning of the industry’s fiscal year.
The surprise, however, was the growing gap between discounters and traditional retailers. Discount chains registered a 3 percent same-store sales gain, while wholesale clubs posted a 9.2 percent gain. Meanwhile, same-store sales at apparel chain stores fell 1.4 percent, according to the council’s tally. Except for Wal-Mart, whose shares rose 33 cents to $57.16, investors pushed many retailers’ shares down Thursday. Penney’s stock fell 2.41 percent and Costco’s more than 1 percent.
