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Discounters in Driver's Seat

Home Category Continues to Stagnate

If ever there were a haves and have-nots month, May 2008 would qualify. The list of comparable-store gainers, running from Costco up 9.0% and Ross Stores up 7.0% to TJX Cos. up 2.0% and Family Dollar up 1.8% — and Wal-Mart square in the middle with a 4.0% gain — spells out the formula for success in the ongoing retail climate.

In fact, Wal-Mart even reported that its home products showed a comp-store gain in May — the first such uptick for the category in more than two years.

The comp-losers list, meanwhile, smacked merchandisers right in the middle. Each and every department store in the habit of reporting monthly sales had a negative-comp story to tell, joined by upscale mass merchant Target.

Target, posting a 0.7% comp decline that president and ceo Gregg Steinhafel noted, "was in line with our planned range," was out of step with Wal-Mart, where consumers seemed to flood into supercenters to buy everyday consumables — at the expense of retailers elsewhere trying to sell fashion goods.

That trend is not expected to change anytime soon: Looking ahead, Target projected June comps from -2% to 0%, against its year-ago comp gain of 3.3%.

Among category sales, home continues to stagnate.

"Sales in the home and furniture category were significantly below trend," Dillard's said in its statement, reporting overall comps down 7.0%.

"Gifts, linens and ladies' career were below company trend," said Stein Mart, which trailed all HTT-covered chains with a 12.4% comp fall in May.

"Textiles and women's apparel were the most challenging," said Jim Famalette, chairman and ceo of Western department store chain Gottschalks, where May comps were down 8.6%.

"Most home categories continued to experience weaker sales," read the JCPenney release. The 1,074-unit department store operator noted its 4.4% comp decline was in line with projections.

However — there was this glimmer: "The home area showed its first comparable store sales increase in more than two years." That remark was included in the Wal-Mart report, which nonetheless focused on groceries, pharmacy and consumer electronics. "In a difficult economic environment for home, the category had positive comparable sales due to an emphasis on presentation of branded merchandise and Mother's Day," Wal-Mart concluded.

And this grace note, from Kohl's: "Home, footwear and men's performed better than the company for the month." However, the month at the 957-store mid-tier chain saw an overall comp drop of 7.2%.

Many retailers reported soft sales in seasonal categories — a warning, in effect, that promotional activity is about to swing up yet again.

"Seasonal categories dependent on weather were soft," was the Wal-Mart takeaway.

"Seasonal categories were challenged throughout ladies' ready to wear, men's, shoes, accessories, and intimate apparel," said Tony Buccina, vice chairman and president — merchandising, Bon-Ton Stores, which recorded a 9.9% comp drop in May.

The Johnson Redbook Same Store Sales Index (SSI) showed a 2.6% comp gain for May among the 39 mostly softlines retailers tracked. In the department store segment, however, the SSI showed a 3.6% comp decline. This reversal came one month after that group of mid-tier and upstairs chains (ranging from Kohl's to Neiman Marcus) had logged its first comp gain since November.

WINNERS AND LOSERS
Same-store sales % change

Winners
Costco 9.0%
Ross Stores 7.0
Sam's Club 6.5
Wal-Mart U.S. 4.0
Fred's 3.4
TJX Cos. 2.0
Family Dollar 1.8
Losers
Stein Mart -12.4%
Bon-Ton -9.9
Gottschalks -8.6
Kohl's -7.2
Dillard's -7.0
JCPenney -4.4
Duckwall-ALCO -2.0
Target -0.7


MAY SALES FOR KEY RETAILERS
Four weeks ended May 31a(dollar amounts in millions)

2008 sales 2007 sales Total % chg. Same-store % chg.
a. Reporting periods vary from chain to chain.
b. Costco: 4 weeks and 39 weeks ended June 1.
c. Duckwall-ALCO: 4 weeks and 17 weeks ended June 1.
d. Fred's: Comp sale change excludes 67 stores closed or slated to be closed.
e. JCPenney: comps for stores only; no longer breaks out direct-to-consumer sales.
f. Wal-Mart: 4 weeks and 17 weeks ended May 30; Int'l not included in comps.
g. Family Dollar: 39 weeks.
The Bon-Ton Stores $214.3 $234.7 (8.7) (9.9)
Costco b $5,770.0 $5,140.0 12.0 9.0
Dillard Dept. Stores $499.7 $527.9 (5.0) (7.0)
Duckwall-ALCO c $42.8 $39.7 7.9 (2.0)
Family Dollar $545.0 $522.0 4.4 1.8
Fred's d $143.5 $132.3 8.0 3.4
Gottschalks $42.4 $46.4 (8.5) (8.6)
J.C. Penney e $1,344.0 $1,377.0 (2.4) (4.4)
Kohl's Corp. $1,205.9 $1,191.9 1.2 (7.2)
Ross Stores $513.0 $450.0 14.0 7.0
Stein Mart $108.4 $118.9 (8.8) (12.4)
Target Corp. $4,564.0 $4,325.0 5.5 (0.7)
TJX Cos. $1,450.0 $1,370.0 6.0 2.0
Wal-Mart Stores Inc. f $31,036.0 $28,258.0 9.8 4.4
Wal-Mart Stores $19,491.0 $18,073.0 7.8 4.0
Sam's Club $3,805.0 $3,546.0 7.3 6.5
International $7,740.0 $6,639.0 16.6 N.A
17 WEEKS
The Bon-Ton Stores $914.6 $972.3 (5.9) (5.9)
Costco b $52,690.0 $46,810.0 13.0 8.0
Dillard Dept. Stores $2,179.9 $2,291.1 (5.0) (6.0)
Duckwall-ALCO c $148.8 $146.0 2.0 (6.6)
Family Dollar g $5,217.9 $5,202.4 (0.3) (0.3)
Fred's d $607.8 $574.6 6.0 2.4
Gottschalks $167.6 $188.2 (11.0) (9.9)
JCPenney e $5,471.0 $5,727.0 (4.5) (6.6)
Kohl's Corp. $4,830.1 $4,764.0 1.4 (6.8)
Ross Stores $2,070.0 $1,860.0 11.0 4.0
Stein Mart $460.5 $495.0 (7.0) (10.1)
Target Corp. $18,866.0 $17,946.0 5.1 (0.7)
TJX Cos. $5,900.0 $5,500.0 6.0 3.0
Wal-Mart Stores Inc. f $126,378.0 $115,875.0 9.1 2.8
Wal-Mart stores $79,227.0 $74,632.0 6.2 2.3
Sam's Clubs $15,067.0 $14,133.0 6.6 5.5
International $32,084.0 $27,110.0 18.3 N.A


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