Rite-Aid same-store sales up; many others slump

NEW YORK - Many U.S. retailers said same-store sales fell in May, as expected, as shoppers continue to spend cautiously, focusing on bargains and food.

The declines came in largely in line with analyst expectations, with frequent standouts such as the Buckle Inc. posting better results. Cheap chic discounter Target reported a bigger drop than analysts expected, as apparel and home products continued to be weak sellers. Overall, necessities like food and health care products continued to be the strongest sellers.

In the Philadelphia region, Rite Aid reported an increase in May, while Destination Maternity and Bon-Ton said their sales were down.

According to a preliminary tally by Thomson Reuters, 13 retailers missed estimates, five retailers beat estimates, and one matched expectations.

"There's general softness across the board, as consumers continue to face rising unemployment, falling home values and rising gas prices," said Ken Perkins, president of retail consulting firm Retail Metrics LLC. He expects same-store sales to fall 3.6 percent overall. "One good sign so far is that results aren't coming in drastically worse than expected, so maybe there is stabilization taking place here."

Another positive was some retailers said traffic had improved during the month.

Same-store sales, or sales at stores open at least a year, are a key indicator of retailer performance because they measure growth at existing stores rather than newly opened ones. Economists closely monitor consumer spending because it accounts for about 70 percent of U.S. economic activity.

Drawing conclusions about the broader economy from the numbers is more difficult, Perkins said, because Wal-Mart Stores Inc., the world's largest retailer, stopped reporting monthly same-store sales as of this month. He said Wal-Mart accounts for about 10 percent of retail sales.

The world's largest retailer also has been a standout in recent months. "Wal-Mart has been lifting everybody for the last year and half," Perkins said.

Target same-store sales fell 6.1 percent, a bigger drop than the 4.3 percent analysts expected. Non-discretionary items such as health care and baby products and food were the best sellers, while apparel and home products were weaker.

Warehouse club operator Costco Wholesale Corp. said same-store sales slipped 7 percent in May. Its strongest categories included fresh food and other food products.

Meanwhile BJ's Wholesale Corp. said same-store sales fell 6.8 percent, while analysts predicted a 4.4 percent decline. Traffic was up 5 percent compared with a year ago, however. Food, TVs and computer equipment were the strongest sellers.

TJX Cos. - which said same-store sales rose 5 percent, above expectations - also said traffic increased.

Department-store operator Macy's Inc. said same-store sales slipped 9.1 percent, slightly above the 9.3 percent drop Wall Street expected.

The teen sector continued to be among the best performing sectors, with low-price stores doing the best. The Buckle Inc. and Aeropostale Inc. both known for good deals on trendy fashions, reported double-digit increases.

However, Abercrombie & Fitch - which has kept prices high despite competitors' markdowns - said same-store sales fell 28 percent. Last month, Abercrombie finally bowed to pressure and said it has started to reduce prices.

Limited Brands, which operates Victoria's Secret and Bath & Body Works stores, said same-store sales fell 7 percent, matching analyst expectations. Gap same-store sales fell 6 percent, below expectations, though its Old Navy chain posted a 3 percent rise.

The Camp Hill, Pa.-based drugstore operator said its same-store sales grew 0.6 percent in May, buoyed by growing pharmacy sales at core stores.

Rite Aid said same-store sales of nonpharmacy, or front-end, products such as candy and makeup fell 1.5 percent, and sales of pharmacy items, which make up about two-thirds of its revenue, increased 1.6 percent.

Analysts expected greater growth, according to Thomson Reuters. They expected same-store sales to rise 0.8 percent, with front-end sales down 0.6 percent and pharmacy sales rising 1.6 percent.

At "core" stores, same-store sales were up 1.5 percent, as front-end revenue decreased 1.1 percent and pharmacy sales rose 3 percent. Same-store results at former Brooks Eckerd stores were down 1.4 percent, as front-end sales slid 2.5 percent and same-pharmacy sales fell 1 percent.

Rite Aid acquired the Brooks Eckerd stores in June 2007 and finished integrating them last year.

For the five weeks ended May 30, Rite Aid said its total sales fell 1.3 percent, to $2.51 billion from $2.54 billion a year earlier. May marked the end of Rite Aid's fiscal first quarter, and the company said its same-store sales grew 0.6 percent for the period, with front-end sales down 1.6 percent and same-pharmacy sales rising 1.6 percent.

For the quarter, total sales fell 1.2 percent from last year, to $6.51 billion from $6.59 billion. According to Thomson Reuters, analysts expected $6.59 billion in sales.

The company had 4,825 drugstores at the end of the quarter.

In morning trading, Rite Aid shares rose 9 cents, or 6.5 percent, to $1.48.

Still feeling the effects of the closing of its leased departments in Sears stores in June 2008, the Philadelphia-based retailer of maternity apparel reported that May's net sales were down 5.3 percent, to $51.3 million, from $54.2 million for the year-ago period.

Comparable store sales for the month of May 2009 decreased 5.4 percent on a reported basis, and decreased approximately 5.7 percent after adjusting for the "days adjustment calendar timing shift." The numbers reported a year ago had benefited from a calendar adjustment, too.

CEO Ed Krell made note of the difficult retail conditions, but also noted that warmer-than-usual weather at the end of April had shifted to that month some sales that would have been expected in May, thus improving April's same-store sales outcome. He said that combined sales for April and May were in line with the guidance range.

Destination Maternity closed three stores and did not open any last month. As of the end of May, it operates 730 stores, 357 leased department locations, and 1,087 total retail locations, fewer in each of those categories than a year ago.

It runs the stores Motherhood Maternity, A Pea in the Pod, and Destination Maternity; sells on the Web on its own site and through Kohl's (in its stores and online); and is expanding into India and the Middle East.

Although the company has pulled out of its Sears locations, it has opened more leased departments in Babies "R" Us.

Shortly after Nasdaq trading opened this morning, shares were priced at $13.50, down 45 cents (3.23 percent).

The York-based department-store chain said its comparable sales fell 12.1 percent in May as it experienced soft sales in furniture, men's, home and ladies' shoes.

The retailer said overall sales for the four-week period ended May 30 fell 11.9 percent to $188.9 million, down from $214.3 million last year.

Year-to-date comparable store sales fell 9.4 percent, while total sales have fallen 8.9 percent to $833.5 million, from $914.6 million last year.

Tony Buccina, the company's vice chairman, said in a statement that the same-store sales drop was due to reduced clearance merchandise sales. But he said that will have a positive impact on margins.

He said the best-performing areas were in ladies' moderate sportswear, dresses, cosmetics and intimate apparel.

Bon-Ton operates Bon-Ton, Bergner's, Boston Store, Carson Pirie Scott, Elder-Beerman, Herberger's and Younkers stores. Its shares shed 4 cents, to $4.21 in morning trading.