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Mike Benbow, Business Editor benbow@heraldnet.com

Gas prices, housing woes still a drag on retail sales

Associated Press

NEW YORK -- Consumers gave some of the nation's retailers a little relief in April after months of dismal sales, gravitating toward less expensive discounters and wholesale clubs, but generally still shying away from stores selling clothes and other non-necessities.

Monthly sales reports issued Thursday were better than expected, but still pointed to consumers contending with rising gas prices, sagging home values and worries about jobs. Wal-Mart Stores Inc. and Costco Wholesale Corp. were among the top performers last month, while most mall-based apparel stores struggled.

"Consumers are focusing on value and price points and stretching their dollars," said Ken Perkins president of RetailMetrics LLC, a research company in Swampscott, Mass. "They are feeling the pinch on multiple fronts."

He and other analysts expect only a modest uptick in sales in May and June as consumers spend tax rebate checks that are starting to arrive.

"There's too much going on," in the economy, Perkins said. He and others expect shoppers to use the extra cash to pay down debt and catch up on utility and food bills.

According to a preliminary tally from Thomson Financial, 19 retailers beat estimates, while nine missed. The tally is based on same-store sales, or business at stores open at least a year; they are considered a key indicator of a retailer's health.

Analysts said some retailers were forced to discount to bring in business. With the retailing first quarter having ended at the end of April, companies will start reporting their earnings next week, and any heavy markdowns will likely erode the profits of some companies.

Perkins estimates earnings for the industry will decline by 14.9 percent, compared to a projection in January of 5.3 percent profit growth. Still, earnings would be worse if retailers hadn't been prudent about cutting costs and scaling back inventory, he said. In fact, Kohl's Corp. actually raised its earning outlook on Thursday.

The UBS-International Council of Shopping Centers retail sales tally for April rose 3.6 percent, surpassing the 2 percent growth estimate. That followed a 0.5 percent decline the previous month, the weakest March in 13 years.