Experts Discuss Retail, Dollar, ECB Moves

Wall Street pros assess May retail results without the inclusion of Wal-Mart, the European Central Bank leaving rates unchanged, and more

By BW Staff

With the 800-pound gorilla silent, what did the other denizens of the U.S. retail jungle have to say about May sales? The International Council of Shopping Centers' U.S. chain store sales index for May, released June 4, sank 6.4% from a year earlier, but the news was clouded by the group's admission that this is the first month of the report that does not include Wal-Mart (WMT) sales (the company has ceased releasing that data on a monthly basis).

Without Wal-Mart's results, the big retailing picture seems less clear, even as investors are looking for hints that consumer spending has picked up amid early hopes for economic recovery.

The retailers who did release May sales figures generally disappointed the Street, with big names like Target (TGT), Abercrombie & Fitch (ANF), Costco (COST), Hot Topic (HOTT), Family Dollar Stores (FDO), Dillards (DDS), Nordstrom (JWN), Macy's (M), BJ's Wholesale (BJ), Children's Place (PLCE), and Limited Brands (LTD) falling on June 4.

BusinessWeek compiled comments from Wall Street economists and strategists about the retail sector, interest rates, the dollar, and other important topics on June 4:

Emily Shanks, Barclays Capital (BCS)
May comparable-store sales mainly missed consensus [forecasts], but there were some notable outperformers, and inventories remain clean. This is the first month without Wal-Mart disclosing monthly comps, which, given Wal-Mart's size, limits trend transparency somewhat. There was a mixed performance within the different channels. Notably, reversing a long-held trend, department stores were generally in line with to modestly better than expectations. Category-wise, dresses and cosmetics were repeat outperformers; and accessories, intimates, and petite were strong as well. Home and furniture, in addition to fine jewelry, continued to underperform.

Geographically, the Southeast was a consistent underperformer, while the Southwest and Mid-Atlantic regions were notably strong. Reported inventories were well controlled, on plan, and down year-over-year; and in some instances clearance inventory was noted to be down year-over-year, all supporting margin performance.

Colin Ellis, Daiwa Securities (8601.T)
The [European Central Bank] today decided to leave interest rates unchanged, with the refi rate staying at a record low of 1.0%. At the accompanying press conference, [ECB President Jean-Claude] Trichet confirmed that the ECB will press ahead with its plan to buy €60 billion of euro-denominated covered bonds.

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