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Retailers report a fragile spending recovery

NEW YORK - Americans, uninspired by cool weather and feeling fresh concerns about the economy, spent with caution in May after a tepid April.

NEW YORK - Americans, uninspired by cool weather and feeling fresh concerns about the economy, spent with caution in May after a tepid April.

Retailers' May sales reports, released Thursday, underscore how fragile the consumer spending recovery remains.

The International Council of Shopping Center index for revenue at stores open at least a year rose 2.6 percent in May, in line with a reduced growth forecast that ranged anywhere from 2 percent to 2.5 percent.

Michael P. Niemira, ICSC's chief economist, had originally expected a 3.5 percent gain. May's results follow a 0.8 percent gain in April, and a 9.0 percent increase in March.

May's results are being compared with a weak May 2009 that saw the figure drop 4.6 percent.

A mix of stores found business challenging during the month.

In the Philadelphia region, the handful of companies reporting saw their comparable sales decrease from last year, but perhaps at improving rates.

Target Corp.'s chairman, president and CEO, Gregg Steinhafel, noted in a statement that its recent performance reinforces his belief that the company will continue to "experience volatility in the pace of economic recovery." The chain posted a small gain that was below internal forecasts.

Department store chain J.C. Penney and many teen merchants including Abercrombie & Fitch Co. and American Eagle Outfitters Inc. reported declines in revenue at stores open at least a year.

Costco Wholesale Corp. reported a gain slightly below Wall Street expectations. Gap Inc. reported a small gain overall, but its namesake chain in the U.S. saw revenue decline. The results are being compared with depressed spending a year ago.

Among the bright spots were Victoria's Secret parent Limited Brands Inc. and T.J. Maxx parent TJX Cos., both of which reported bigger-than-expected increases.

Revenue at stores open at least a year is a key indicator of a retailer's health.

Destination Maternity

Destination Maternity Corp. said that same-store sales fell 3.9 percent in May.

The maternity clothing retailer said total sales for the month increased 1.6 percent to $52.2 million.

The results were at the lower end of the retailer's expectations but within its guidance. The company's CEO, Ed Krell, said the company is seeing continued progress, with sales improving in May versus April and even improving within the month itself.

Shares of Destination Maternity fell 28 cents to $27.32 in early-afternoon Nasdaq trading.

Rite Aid

Drugstore operator Rite Aid Corp. said its same-store revenue fell 1.7 percent in May on a mix of lower front-end retail product revenue and pharmacy revenue.

Analysts polled by Thomson Reuters expected a 1.1 percent drop in same-store revenue for the chain, which is based in Camp Hill, Pa.

Front-end same-store revenue fell 3.6 percent while pharmacy same-store revenue fell 0.8 percent. Same-store revenue, or revenue at locations open at least a year, is considered an important measurement of retailer health because it shows results at older stores and not newly opened ones.

Rite Aid said its total revenue fell 2.7 percent to $2.44 billion in May.

During the quarter, same-store revenue fell 1 percent, with front-end same-store revenue down 1.3 percent and pharmacy revenue down 0.9 percent.

Rite Aid had 4,767 stores at the end of the quarter, down from 4,825 at the same time a year earlier.

Shares were priced at $1.17, down 1 cent, in early-afternoon trading on the New York Stock Exchange.

Charming Shoppes

Bensalem-based Charming Shoppes Inc., which owns plus-size clothing chains, said that its same-store sales trend improved, from declines of 13 percent in last year's third quarter and 12 percent in last year's fourth quarter, to a decline of 2 percent in the quarter that ended May 1.

For the Lane Bryant division alone, the company said that same-store sales for the first quarter were down 3 percent, contrasting with their being down 14 percent and 15 percent in the third and fourth quarters of last year, respectively.

Charming Shoppes has 2,128 retail stores in 48 states. Shares were priced at $4.47, up 2 cents, in early-afternoon Nasdaq trading.


Bon-Ton Stores Inc. said that revenue in its department stores open at least one year fell 1.1 percent in May.

Total sales for the four weeks ended May 29 fell 1.3 percent to $188.9 million at the York-based chain.

Year-to-date, revenue in stores open at least one year fell 2 percent while total sales rose 1.7 percent to $847.9 million last year.

Best performing categories in May included children's, accessories and sportswear, while weaker categories were furniture and juniors.

The company said sales were hurt by unseasonable weather and a shift in the timing of the Memorial Day holiday, but added that sales strengthened in the last week of May as the weather improved.

Company shares were priced at $11.98, down 14 cents, in early-afternoon Nasdaq trading.