from the News-Leader, Springfield, MO
NEW YORK (AP) -- Caught in the maelstrom of higher gas and food prices, Americans - even more affluent ones - are seeking shelter in wholesale clubs and discount apparel chains.
Low-price operators Costco Wholesale Corp., Wal-Mart Stores Inc. and TJX Cos. reported better-than-expected sales on Thursday, while traditional apparel chains J.C. Penney Co. and Limited Brands Inc. struggled.
"The smart shopper is in full bloom," said Craig R. Johnson, president of consultancy Customer Growth Partners. "They're looking to stretch their household budgets, and if you can get decent quality merchandise, why pay full price?"
"Smart shopping" is sweeping through all wage classes, analysts say, and it could spell trouble for retailers' profits and for the economy, too.
To lure customers, apparel chains are discounting more. First-quarter profits are slated to be down by 14.9 percent, according to Ken Perkins, president of RetailMetrics LLC, a research company in Swampscott, Mass. That compares to a projection in January of 5.3 percent profit growth.
Retailers' first quarter ended in April and companies will start reporting their financial results next week.
"Consumers are focusing on value and price points and stretching their dollars," said Perkins. "They are feeling the pinch on multiple fronts."
He and other analysts expect only a modest rise in sales in May and June as consumers spend tax rebate checks that are starting to arrive.
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