Retailers Bounce Back in May '07

Consumers regained their appetite for spending in May after a downturn in April. The recovery ended talk of a market slowdown, said Michael Niemira, chief economist of the New York–based International Council of Shopping Centers.

“May’s sales rebound confirmed that the April sales tumble was largely an anomaly and not a sign of a more severe pullback in consumer spending,” Niemira said.

April’s poor sales were the result of unseasonably cool weather and the consumers’ brief rest from shopping after an Easter spending spree, which had cash registers ringing in March.

The retail sector grew 2.5 percent in May compared to the same period last year, according to Niemira. Department stores experienced the healthiest increase. Sales for the department- store sector grew 2.2 percent in May. Discounters experienced a good month with a 1.7 percent gain. However, sales for the apparel chain stores dropped 0.6 percent, according to the ICSC’s index.

May sales were disappointing for five of the chain stores tracked by California Apparel News’ index. Ann Taylor’s same-store sales dropped 4.6 percent in May. Brisbane, Calif.–based Bebe declined 3 percent. Chico’s dropped 2.9 percent. San Francisco–based Gap fell 3 percent, and Hot Topic of City of Industry, Calif., declined 6.1 percent.

But other apparel chain stores had a reason to cheer in May. Anaheim, Calif.–based Pacific Sunwear bounced back in May by reporting a 6.4 percent increase in same-store sales. This performance followed a disappointing April for the chain in which same-store sales declined 16.5 percent.

Retail analyst Liz Pierce wrote that this performance was proof that the surf and skate retail powerhouse could be experiencing a recovery. “We believe that the merchandise has dramatically improved, especially on the girls’ side,” Pierce wrote in a June 7 research note.

Pierce works for Roth Capital Partners in Newport Beach, Calif.

May’s overall strong performance could continue, Niemira said. He forecast that the retail industry will grow by more than 2 percent in June.—Andrew Asch