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May Retail Sales Remain Strong

6/01/2006 07:56:00 AM Eastern

New York — Business remained brisk at the nation’s largest discount chains last month, although high prices at the pump took some wind out of Wal-Mart’s sales.

Net sales at Wal-Mart’s flagship stores rose 7.7 percent to $16.9 billion in May, although comp-store sales came in at the low range of company projections at 2 percent. “Fuel prices continue to be a concern for our customers,” said Tom Schoewe, executive VP/chief financial of Wal-Mart Stores. “We believe that our customers are consolidating their store visits,” resulting in decreased traffic, “and focusing their spending on consumables, a trend that we have been seeing since Easter.”

Wal-Mart has also observed an increase in the bimonthly ebb and flow of sales activity, suggesting that more of its customers are essentially living paycheck to paycheck.

Target, which draws a higher income demographic, said net sales increased 12.3 percent to $3.9 billion last month and that comparable store sales grew 5.7 percent.

Among the wholesale clubs, channel leader Costco said net sales rose 15 percent companywide to $4.7 billion in May, while domestic same-store sales increased 9 percent. At Wal-Mart’s Sam’s Club division, net sales increased 7.1 percent to $3.3 billion while comp-store sales grew 4 percent. For BJ’s, May brought an 8.6 percent spike in net sales, and a 4.2 percent increase in comps. The No. 3 wholesale club cited white goods and CE — particularly TVs — as strong performers last month, although comp sales of PCs and DVD software were soft. Excluding sales of gasoline, the average transaction amount rose 6 percent in May while traffic fell by 4 percent, BJs said.

Separately, novelty CE seller Sharper Image said net sales slid 27 percent companywide last month to $33.4 million, while comp-store sales fell 36 percent. The company said it is working to reverse the ongoing declines by accelerating its new product pipeline, and will likely bring in a new slate of directors at its annual shareholder meeting.