Retailers Report Sluggish May Sales : Analysts Say Slump Could Continue Through Summer

Consumers continued to spend at a slow pace in May, the nation’s largest general retailers reported Thursday, and Wall Street analysts said the slump could continue through much of the summer.

High installment debt, an aversion to higher prices and boredom with current fashions--the same factors that have kept consumers cautious for months--contributed to the lackluster May performance and were exacerbated by the unusually cool spring, analysts said.

Among the retailers reporting sales, Sears, Roebuck & Co. said its overall sales rose 5.1% for the month, compared to a year earlier. Los Angeles-based Carter Hawley Hale Stores Inc. said its overall sales were up 1.5%; Dayton Hudson Corp., which owns Target and Mervyn’s, reported a 17.6% increase, and May Department Stores Co., which owns May Co. California and Robinson’s, said the overall increase for the month was 17.8%

“The sales were sluggish by normal standards,” said Jeffrey Edelman, a retail industry analyst with the investment firm Drexel Burnham Lambert Inc.

Jeffrey Feiner, an analyst with Merrill Lynch & Co., described last month’s sales as “in line with or slightly below conservatively budgeted expectations.”

Retail sales have been sluggish for more than a year, and Feiner said store owners have responded by cutting back their inventories.

He warned this could result in fewer orders to manufacturers and “could potentially back up into the rest of the economy.”

Consumer spending, which accounts for two-thirds of the gross national product, is an important barometer of the economy’s health.

Edelman said June sales results could show a pickup if the warmer weather that arrived at the end of May held up.

However, a major turnaround was not expected for several months.

“The next chance for a decent sales gain will be in August with the back-to-school” merchandise, said Monroe Greenstein, an analyst with Bear Stearns & Co.

Many retailers said their May sales were only marginally higher or down from levels of a year ago.

May’s 5.1% gain for Sears followed a 3.5% increase in the first 17 weeks of this year. But sales at stores open at least a year rose only 0.2% last month and 1.1% so far this year.

Analysts pay closer attention to same-store sales, which provide a more accurate picture of a retailer’s performance.

K mart Corp. said its overall sales rose 6% last month and 4.8% so far this year. Same-store sales were up 2.3% for May and 1.7% for the year-to-date.

Wal-Mart Stores Inc. said its overall sales gained 27% last month and 31% so far this year. Same-store sales rose 8% for May and 12% year-to-date.

J. C. Penney Co., which emphasizes its fashion lines, said its overall sales fell 1.2% last month but were up 2.4% so far this year. Penney’s same-store sales declined 1.4% in May and rose 1.5% for the first 17 weeks.

Carter Hawley Hale Stores, the owner of the Broadway, said its overall sales were up 1.5% last month and were down 2% so far this year. Same-store sales were up 1.5% for May and down 2% for the year-to-date.

Dayton Hudson Corp. said its overall sales rose 17.6% in May and 18.1% so far this year. Same-store sales were up 1.7% last month and 1.5% for the year-to-date.

May Department Stores Co. reported a 17.8% overall increase in May and a 6.5% rise year-to-date. Same-store sales were up 1.3% last month but down 0.3% during the first 17 weeks. The company’s May results included sales from the newly acquired Foley’s and Filene’s divisions.

F. W. Woolworth Co. reported a 14.2% gain in May and a 12.2% increase so far this year.

Montgomery Ward & Co. said its overall sales rose 3.7% last month and 3% for the year-to-date. Same-store sales edged up 0.9% in May and 0.3% so far this year.

The numbers reported Thursday were for general merchandise and apparel retailers and do not reflect sales of auto dealers or supermarkets.

Feiner predicted that the retailers’ second-quarter earnings reports would be as disappointing as in the first quarter, when many stores reported flat or slightly higher profits.

Greenstein said many stores are taking markdowns on spring merchandise--in particular apparel--earlier than usual. This will hurt their bottom lines, but more favorable tax rates should help mitigate some of the damage, he said.

MAJOR RETAILERS’ SALES IN MAY

In millions % of dollars 1988 change Sears 2,338 +5.1 K mart 2,140 +6.0 J.C. Penney 990 -1.2 May Dept. Stores 902.6 + 18.0 Dayton Hudson 810.2 +17.6 Wal-Mart Stores 1,625 +27.0 Woolworth** 331.0 +14.2 Montgomery Ward 348.3 + 3.7 Carter Hawley Hale 179.8 + 1.5

* Excludes supermarket sales.

** Excludes foreign sales.