Retailers Beat Sales Forecasts in May

U.S. retail sales rose in May as shoppers splurged on spring clothing, undeterred by the effect of soaring gasoline prices on household budgets.

Most retailers, including Wal-Mart Stores Inc., Gap Inc. and Costco Wholesale Corp., outperformed sales expectations for the month after a weak April. Demand for items including electronics and food helped offset effects of dwindling tax returns and a late U.S. Memorial Day holiday, which pushed some sales into June.

Wal-Mart, the world’s largest retailer, said Thursday that sales at stores open at least a year, a key retail measure known as same-store sales, jumped 5.9% last month. Sales hit the high end of its 4% to 6% target range, outshining smaller competitor Target Corp., which posted a 4.6% rise, in line with estimates.

The solid gain raised eyebrows because Bentonville, Ark.-based Wal-Mart had cautioned in May that higher gasoline prices, which are costing the average American an extra $7 a week, could cut into purchases by its more than 100 million weekly customers.

For June, Wal-Mart forecast that same-store sales would rise at the low end of a 4% to 6% range. Its stock edged up 25 cents, or 0.4%, to $56.60 on the New York Stock Exchange.

J.C. Penney Co. posted 9.1% growth in May same-store sales on a strong Mother’s Day and stood by its quarterly profit view but cited “concerns over the impact that higher energy prices and other external issues” may have on consumers.

In contrast, higher fuel prices paid off for wholesale club operators, many of whose stores sell gasoline at lower-than-average prices. Costco, BJ’s Wholesale Club Inc. and Wal-Mart’s Sam’s Club division each beat May sales forecasts by more than 50%.

More sales surprises came from Kohl’s Corp., Federated Department Stores Inc. and women’s apparel chains such as Talbots Inc., which exceeded expectations.

But Sears, Roebuck & Co., the largest U.S. department store operator, warned that quarterly same-store sales would be flat to down and blamed weak clothing and appliance sales for a worse-than-expected drop in May.

Lackluster children’s and home goods businesses weighed on sales at rival department store firms Dillard’s Inc. and May Department Stores Co., and home furnishings retailer Pier 1 Imports Inc. cut its quarterly profit view because of a disappointing holiday promotion.

Overall, May same-store sales advanced 5.1%, compared with a forecast 4.6% rise, according to Thomson First Call.

Specialty apparel companies were standouts, including women’s chains Talbots with a better-than-expected 8.1% rise and Limited Brands Inc., which saw a 3% increase on demand at its Victoria’s Secret chain.

Gap, the biggest U.S. specialty apparel retailer, posted a better-than-anticipated 6% rise in May same-store sales, driven by summer merchandise.