U.S.May retail sales likely grew at a slower pace

U.S. Retail Sales Gains Slow as Pullback Hits Teen Chains

Sales gains at U.S. retailers probably slowed during May as concerns about the economy crimped purchases in the second half of the month.

Sales at 30 chains that report monthly figures tomorrow may have climbed 2.9 percent in May from a year ago, according to analysts estimates compiled by Retail Metrics Inc., the Swampscott, Massachusetts-based research firm. At the start of May, analysts predicted sales gains of 4 percent, Retail Metrics said.

Consumers held back on shopping last month after unemployment rose in April and the sovereign-debt crisis in Europe intensified. Gap Inc. Chief Executive Officer Glenn Murphy said last week that he is still seeing a volatile consumer environment. Conditions remain challenging, Limited Brands Inc. Chief Administrative Officer Martyn Redgrave said.

There are still some lingering economic concerns here in the back of people s minds, said Ken Perkins, president of Retail Metrics. The European crisis has just sort of exacerbated that.

Teen chains like Abercrombie & Fitch Co. and Hot Topic Inc. may post the only decline of any retail category, falling 1.9 percent in May, according to the estimates from Retail Metrics. It would be the second straight drop at teen stores, which posted a bigger-than-expected slide in April.

Stretching Dollars

Discount chains probably helped counter that decline. Sales at Costco Wholesale Corp., the largest U.S. warehouse club, may have jumped 9.9 percent, according to an average of analysts estimates compiled by Retail Metrics. Sales across all discounters may have risen 5.9 percent, Retail Metrics said.

The discount space continues to benefit from consumers still feeling economic pressures and looking to stretch every dollar, even though we have begun to see some trade-up as the economy has improved, said Retail Metrics Perkins.

Spending in April didn t increase for the first time since September, according to Commerce Department figures released May 28, as consumers used growing wages to rebuild savings. Incomes climbed 0.4 percent for a second month, and the savings rate rose for the first time in four months. The euro-region economy was thrown into crisis after the threat of contagion from Greece s budget woes eroded investor sentiment and forced governments to step up spending cuts to reduce deficits.

Sales at U.S. stores open at least a year also were tempered in May by cooler weather at the start of the month and a late Memorial Day, which probably shifted more purchases into June, Perkins said. Memorial Day fell on May 31 this year compared with May 25 a year ago. Last month s sales include purchases through May 29, according to the National Retail Federation s retail sales calendar.

Retailers faced easier year-over-year comparisons, as comparable-store sales dropped 4.4 percent in May 2009. They will begin to cycle monthly sales gains in September after a year of declines, Perkins said.

An overall increase would be the ninth straight month of gains after sales declined during the recession.