Retailers report May sales declines

Many retailers said same-store sales fell in May, as expected, as shoppers continue to spend cautiously, focusing on bargains and food.

The declines came in largely in line with analyst expectations, with frequent standouts such as The Buckle BKE posting better results. Cheap chic discounter Target TGT reported a bigger drop than analysts expected, as apparel and home products continued to be weak sellers. Overall, necessities like food and health care products continued to be the strongest sellers.

According to a preliminary tally by Thomson Reuters, 13 retailers missed estimates, five retailers beat estimates and one matched expectations.

"There's general softness across the board, as consumers continue to face rising unemployment, falling home values and rising gas prices," said Ken Perkins, president of retail consulting firm Retail Metrics LLC. He expects same-store sales to fall 3.6% overall. "One good sign so far is that results aren't coming in drastically worse than expected, so maybe there is stabilization taking place here."

Another positive was some retailers said traffic had improved during the month.

Same-store sales, or sales at stores open at least a year, are a key indicator of retailer performance because they measure growth at existing stores rather than newly opened ones. Economists closely monitor consumer spending because it accounts for about 70% of economic activity.

Drawing conclusions about the broader economy from the numbers is more difficult, Perkins said, because Wal-Mart WMT, the world's largest retailer, stopped reporting monthly same-store sales as of this month. He said Wal-Mart accounts for about 10% of retail sales.

The world's largest retailer has also been a standout in recent months. "Wal-Mart has been lifting everybody for the last year and a half," Perkins said.

Also weighing on results was last year's $50 billion fiscal stimulus, which shoppers received in May last year and retailers credited for a lift in sales.

Elsewhere, "the trends we've seen through the first quarter are continuing," said Stifel Nicolaus analyst Richard Jaffe. "The consumer has voted with their pocketbook, they want better value and higher quality at better prices."

Target same-store sales fell 6.1%, a bigger drop than the 4.3% analysts expected. Non-discretionary items such as healthcare and baby products and food were the best sellers, while apparel and home products were weaker.

Warehouse club operator Costco Wholesale COST said same-store sales slipped 7% in May. Its strongest categories included fresh food and other food products.

Meanwhile BJ's Wholesale BJ said same-store sales fell 6.8%, while analysts predicted a 4.4% decline. Traffic was up 5% compared with a year ago, however. Food, TVs and computer equipment were the strongest sellers.

TJX Cos. TJX— which said same-store sales rose 5%, above expectations — also said traffic increased.

Department-store operator Macy's M said same-store sales slipped 9.1%, slightly above the 9.3% drop Wall Street expected.

The teen sector continued to be among the best performing sectors, with low-price stores doing the best. The Buckle and Aeropostale ARO, both known for good deals on trendy fashions, reported double-digit increases.

However, Abercrombie & Fitch ANF— which has kept prices high despite competitors' markdowns — said same-store sales fell 28%. Last month, Abercrombie finally bowed to pressure and said it has started to reduce prices.

Limited Brands LTD, which operates Victoria's Secret and Bath & Body Works stores, said same-store sales fell 7%, matching analyst expectations. Gap GPS same-store sales fell 6%, below expectations, though its Old Navy chain posted a 3% rise.