US discount stores beat downturn

Consumers are seeking ways to cut spending

Discount firms Wal-Mart and Costco saw sales rise in April, as consumers sought cheaper options to counter the rising cost of essentials.

The world's largest retailer, Wal-Mart said same store sales, except for fuel, were 3.2% higher in April year-on-year.

Retailer Costco also said same-store sales were better than expected, up 8% in April on a year earlier.

As the cost of food and fuel climbs, consumers are finding ways to spend less on other goods.

Crude oil prices have risen sharply recently to more than $120 a barrel, pushing up petrol prices, and analysts expect both to keep climbing.

'Tougher economy'

Ken Perkins, president of Retail Metrics, said discounters "clearly stood head and shoulders" above all firms last month.

Eduardo Castro Wright, head of Wal-Mart's US store division, said: "The economy continues to get tougher and the 'paycheck cycle' is more pronounced for customers than in the past months."

He added: "As money gets tighter for them toward the end of the month, sales drop more than we have seen in the past."

But more while Wal-Mart and Costco fared well, some of the more expensive stores have suffered.

Limited Brands, which runs the Victoria's Secret and Bath and Body Works chains, saw April same-store sales drop by 5%, twice the average drop expected by analysts.

And Gap same-store sales dropped by 6% - also more than forecast.