By  on June 1, 2011

Even a strong reading on May same-store sales might not be sufficient to calm growing concerns about the economy in the second half as anxiety about Main Street on Wednesday spread to Wall Street.

While Macy’s Inc. topped projections with a 7.4 percent comparable-store gain, a larger pool of retailers is expected to turn in mixed results today as lower-income shoppers show the strains of higher food and gasoline prices, and there continues to be lingering nervousness about jobs.

That nervousness is spreading to investors, who looked past Macy’s strong report and traded the S&P Retail Index down 2.1 percent, or 11.01 points, to 521.62, as debt troubles in Europe and other economic concerns pushed the Dow Jones Industrial Average down 2.2 percent, or 279.65 points, to 12,290.14. Macy’s stock declined 2.1 percent to $28.28 after rising earlier in the day.

Analysts said midtier and higher-end chains with a sharp focus on fashion took market share last month. After the market closed, action sports chain Zumiez Inc. said May comps rose 7.8 percent, while Hot Topic Inc. inched up 0.4 percent.

U.S. apparel sales rose 5.9 percent in May as prices gained 3 percent from a year earlier, according to MasterCard Advisors SpendingPulse, which tracks total sales through a variety of payment methods. Women’s sales were up 5 percent, while men’s gained 9.7 percent.

“Volumes were up even in the face of increasing prices, so that indicates the retailers on the apparel side are certainly feeling like they have some pricing power,” said Mike Berry, director of industry research at SpendingPulse. “That’s an important signal.”

Berry said apparel sales were outpacing overall retail sales and have been one of the consumer bright spots for 10 months.

But the economy and the consumer remain in limbo and even as retailers weigh in with May results this morning, investors will be looking ahead to Friday’s report on employment, which could be more indicative of retail strength going forward. Wednesday’s ADP National Employment Report showed that private sector payrolls grew by 38,000 last month, a dramatic deceleration from April’s increase of 177,000 that Wall Street took to heart. And the nation’s gross domestic product grew at an annual rate of 1.8 percent in the first quarter, down from 3.1 percent in the fourth quarter.

The well-to-do might have returned to Saks Fifth Avenue and Nordstrom, but, even with a slight easing of gas prices, lower-income shoppers are still pinching pennies as higher cotton and labor costs push apparel prices up. If the job market continues to weaken, middle-income shoppers could begin to chafe at the price increases working their way through the apparel supply chain.

“It doesn’t matter if prices are rising as long as incomes are growing as fast or faster,” said Frank Badillo, senior economist at Kantar Retail. “The moment that job and income growth stalls, then it’s time to be particularly worried about the impact of fuel prices.”

A gallon of regular gasoline averaged $3.78 Wednesday, down from $3.95 a month ago, but still up from $2.73 a year ago, according to AAA.

For now, the market is strong enough for retailers to gain traction if they do enough things right.

“It really depends on the perceived value of your merchandise and whether it’s on trend,” said Mark Montagna, a retail analyst at Avondale Partners. “I don’t think the consumer’s really improved all that much.”

In addition to higher commodity prices, Montagna said falling home values and the continued reports of economic weakness have a negative psychological impact.

“There’s nothing in the economy that seems robust,” he said.

Macy’s 7.4 percent gain last month came in well ahead of the 5.6 percent rise projected by Thomson Reuters. The Macy’s and Bloomingdale’s chains, as well as their respective Web sites, all came in at or above plan. The firm’s online sales, which were included in comps, rose 37.7 percent for the month.

For the full year, Macy’s pushed its comp outlook up to a 4.5 percent increase from 4.3 percent.

“Macy’s has had a fashion focus and I think that it’s working for them,” said Marie Driscoll, an equity analyst at Standard & Poor’s. “I don’t think people are really spending money on basics. They’re spending money on fashion. The low end is hurting. The high end, if it’s differentiated, people are not looking at prices.”

Macy’s also appears to be reaping the rewards of its efforts to tailor offerings to local markets and retrain its sales force through its Magic Selling program, under which it trained more than 130,000 store personnel to better understand and guide customers.

“We’re seeing a lot of benefit from the My Macy’s initiative,” said Liz Dunn, an analyst at FBR Capital Markets. “But I think we’re also seeing an increase in benefits from the Magic selling initiative.”

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