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May Sales Rebound At Discount Chains

6/05/2008 01:51:00 PM Eastern

New York — Sales of consumer electronics, buoyed by the first wave of federal rebate checks, helped lead a revenue rebound at discount chains last month.

Wal-Mart said net sales rose 7.8 percent in May to $19.5 billion while comparable store sales increased 4 percent, led in part by strong sales of flat-panel TVs, desktop and laptop computers, and other “digital products.”

Eduardo Castro-Wright, president/CEO of Wal-Mart U.S., said operational improvements, price and merchandising initiatives, and “some benefits” from the federal stimulus checks contributed to an increase in comparable store traffic.

At Target, net sales increased 5.5 percent to $4.6 billion while comp sales slipped 0.7 percent, attributable to a decline in the number of transactions, and partially offset by an increase in average transaction size. CE was among the month’s strongest performing categories and the Midwest was its best-performing region. Sales were weakest in the Northeast, followed by California and Florida, the discount chain said.

Among the wholesale clubs, Costco said net sales rose 12 percent in May to $5.8 billion and comp sales increased 5 percent, excluding gasoline. CE was among the strongest categories, particularly cameras, computers, cell phones and navigation devices. TV sales continued to lag, however, with both unit and dollar volume down by the mid-single digits.

At Wal-Mart’s Sam’s Club division, net sales rose 7.3 percent to $3.8 billion and comp sales increased 3.6 percent excluding gasoline, with video games among its strongest May sellers.

At BJ’s Wholesale Club, net sales rose nearly 16 percent to $824.3 million and comp sales increased 6.8 percent excluding gasoline. Video games were among its strongest performing categories and room air and TVs were among its weakest.

Overall May sales results surprised analysts, who were anticipating a downturn in consumer spending. “May came in better than expected,” said Michael Niemira, chief economist and research director of the International Council of Shopping Centers. Still, the gains were largely limited to the discount and wholesale club channels, suggesting that “consumers are spending in a conservative manner.”

Frank Badillo, senior economist for market research firm TNS Retail Forward, attributed the gains to the federal stimulus checks. “Shoppers are counting on those tax rebates for everyday spending and even a few big-ticket purchases,” he said, noting that the effect should last for several more months as the checks continue to mail.