Retailers See More Shopping in May

NEW YORK (AP) -- Consumers stepped up their shopping in May after tax rebate checks hit mailboxes, giving many of the nation's retailers stronger than expected sales for the month. Still, there were signs that many people are still focusing on necessities such as food and gas.

Discount and lower-priced stores such as Costco Wholesale Corp. and Wal-Mart Stores Inc. were again among the strongest performers.

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Analysts had predicted a gloomy May, with consumers contending with a rising cost of living, declining home values and tightening credit. However, according to a preliminary report from Thomson Financial, of 27 retailers reporting, 13 beat expectations, 3 met expectations and 7 missed.

The tally is based on same-store sales, or sales in stores open at least a year; they are considered a key indicator of a retailer's strength.

"It certainly looks as though gas tanks didn't siphon off all of the rebate stimulus," said Ken Perkins, president of RetailMetrics LLC, a research company in Swampscott, Mass. "Consumers were able to spend in May."

Wal-Mart said same-store sales rose 3.9 percent, while analysts surveyed by Thomson Financial predicted a 1.6 percent rise. Including fuel sales, same-store sales rose 4.4 percent.

The world's largest retailer said it likely saw a benefit from rebate checks. Sales in its food and health categories were strongest, it also had strong sales of entertainment items such as flat-screen TVs and reported the first same-store sales increase in the home category in two years.

Perkins said those results could point to "staycations" this summer, as consumers stay home and purchase electronics or work on home-improvement products instead of taking pricier trips.

Rival Target Corp., which has a somewhat more upscale clientele, said same-store sales fell 0.7 percent, while analysts expected an 0.2 percent drop.

Costco said same-store sales rose 9 percent, ahead of the 6.9 percent analysts were expecting. Results were boosted by food and gas sales, along with the benefit of the weaker dollar, mainly in Canada.

TJX Cos., which operates discount apparel and home furnishing stores including T.J. Maxx and Marshalls, said same-store sales rose 2 percent, edging higher than the 1.8 percent analysts expected.

Mall-based stores such as The Children's Place Retail Stores Inc. also reported results above expectations.

The Children's Place same-store sales rose 10 percent, ahead of the 4.3 percent forecast.

But Limited Brands Inc. said same-store sales fell 6 percent, missing the 5.5 percent drop analysts expected. The company's stores include Victoria's Secret and Bath & Body Works.