Retail Sales Slow in June Due to Gas Prices, Flooding
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Retailers led by Wal-Mart Stores Inc. and Federated Department Stores Inc. reported slower sales growth for June as a jump in gasoline prices curbed spending and flooding discouraged shoppers on the East Coast.
Wal-Mart, the world’s largest retailer, said sales at stores open at least a year rose 1.2%, its smallest gain in 14 months. Sales at Nordstrom Inc., Limited Brands Inc., and Federated missed analysts’ estimates.
June sales rose 2.6%, compared with this year’s average gain of 3.8%, the International Council of Shopping Centers said, based on a survey of 56 chains. Customers of Wal-Mart and other discounters held back on spending as gasoline prices jumped 32% from a year earlier, said ING Investments LLC analyst Arun Daniel.
“There’s no question it’s negative,” said Sarah Henry, an analyst with Berwyn, Pennsylvania-based Sovereign Asset Management, which has owned Wal-Mart shares among its $2 billion under management. “It tends to be clearance month, and we had bad weather and increases in gas prices and that kind of put a damper on things.”
Shares of Wal-Mart fell 32 cents to $46.70 at 4:01 p.m. in New York Stock Exchange composite trading. The stock has declined less than 1% this year. Federated rose 23 cents to $36.47. It’s up 10% so far in 2006.
“When I step back and look at the numbers, it’s definitely a slowdown, but it may not be as meaningful as you might take it,” said ICSC Chief Economist Mike Niemira. “The higher gasoline prices, slower housing are probably still valid worries, but at this point we are really seeing the consumer hold up.” The trade group forecast a 3% to 3.5% increase in July.
Federated, the no. 2 American department store operator, said sales gained 1.7%, falling short of its own forecast. The Cincinnati-based retailer projected July sales growth of 3% to 4% and said second-quarter sales would be at the low end of its earlier forecast of 4% to 6%. Seattle-based Nordstrom said its sales rose 4.7%, less than the 4.9% average estimate of analysts surveyed by Retail Metrics LLC. Limited Brands, based in Columbus, Ohio, said sales increased 3%, less than the 4.8% estimate from analysts.
