Monthly store sales soggy

NEW YORK (CNNMoney.com) -- Most retailers continued to suffer sagging sales in May despite reports that showed more American consumers are regaining confidence in the economy.

"The month of May has been a roller coaster ride for retailers and unfortunately ended on a negative note," said Michael Niemira, chief economist with the International Council of Shopping Centers (ICSC).

Sales tracker Thomson Reuters, which tracks monthly same-sales for 30 retail chains, said overall May sales for the group fell a worse-than-expected 4.8%, compared to a gain of 1.1% last year.

Same-store sales, a key gauge of a retailer's performance, measures sales at stores open at least a year.

The firm had initially forecast May sales to decline 4.1%. Of these merchants, 63% missed analysts' sales estimates, 33% beat and 4% met their forecasts.

The jump in consumer confidence numbers in May had raised hopes of a much-need rebound in consumer spending, which is responsible for fueling two-thirds of the nation's economy.

But that did not materialize.

What's more, Niemira and others said the weakness in May sales also resulted from tougher year-over-year comparisons as consumers last year hit stores after receiving their federal tax rebates.

Wal-Mart effect: Also bearing weight on the overall reading was Wal-Mart's exclusion from the firm's monthly sales index, explained Thomson Reuters' senior research analyst Jharonne Martis.

Wal-Mart's monthly sales gain were helping to prop up the overall index for most of this year. However, Wal-Mart (WMT, Fortune 500), the world's largest retailer, which accounted for 50% of the weight in the index, announced last month that it would no longer provide monthly same-store sales. The retailers instead will issue its same-store sales on a quarterly basis.

Ken Perkins, president of sales tracking firm Retail Metrics, said Wal-Mart's sales results typically would add about 3 percent to his overall monthly forecast based on his index of 31 retailers.

"Our index showed overall sales were down 4.4% in May. With Wal-Mart, they would have been down about 1.2%," he said, based on the mid-point of Wal-Mart's same-store sales forecast of a flat to 3% increase for the second quarter.

"Still, sales were down with or without Wal-Mart," Perkins said. "It shows consumers are still not shopping for a lot of discretionary items. Consumers have lost so much net worth that they feel the need to save more."

Specialty disappointment: Last month's biggest disappointments were specialty chains and department stores.

Limited Brands (LTD, Fortune 500), owner of Victoria's Secret and Bath & Body Works chains, logged a 7% drop in May sales while sales at Gap Inc. fell 6%.

Sales at teen clothier Abercrombie & Fitch tumbled 28% last month

Warehouse club operator Costco (COST, Fortune 500) blamed currency fluctuations and lower gas prices for an overall 7% decline in its same-store sales. Discounter Target's (TGT, Fortune 500) sales slumped 6.1%.

Department store operator Dillard's reported a 12% drop in its same-store sales, while Macy's (M, Fortune 500) sales fell 9.1% in the month.

In the high-end arena, Nordstrom's sales fell 13.1% and Saks' sales dropped 26.6% in May.

Perkins is hopeful that merchants' sales will start to pick up over the next two months, particularly in July as parents commence back-to-school shopping, historically the second-biggest sales period for retailers after the year-end holiday.

The November-December gift-buying months can account for 50% or more of sellers sales for the entire year.

"Historically there's a good correlation between back-to-school sales and the holiday season," said Perkins. "If back-to-school [sales] are decent, it could become a catalyst for holiday sales."

Some optimism: In an encouraging sign, a new ICSC survey of shopping center executives on Wednesday indicated hope that conditions are getting better.

The survey showed executives polled in May felt optimistic about customer traffic and sales improving over the next six months.

"Shoppers are showing signs of moderating their frugality of recent months," Frank Badillo, senior economist at Retail Forward, said in a report Thursday.

"If shoppers can sustain this positive momentum, then it should bear fruit for retail sales by the end of the year, if not the coming months," he said.