By and  on June 5, 2007

Higher fuel costs, a soft housing market and stagnant wage growth could result in bleak May same-store sales, analysts said Monday. The figures will be released Thursday.

With favorable weather and no major holiday shifts to distort results, "May is the first month this year that will provide a true read" on the state of the American consumer, Eric Beder, specialty retail analyst at Brean Murray, Carret & Co., wrote in a report.

Pent-up demand for apparel, summer-like temperatures and a boost from Memorial Day will drive any uptick in sales, analysts said. The Goldman Sachs Retail Same-store Sales Index forecasts a 0.1 percent decline for May, which compares with a 0.2 percent dip in the March and April period, and a 3 percent gain in May 2006.

Still, there will be winners, such as Saks Inc. and Nordstrom Inc., which serve the high-end spender. And a select crop of trend-right specialty retailers will deliver sales results well above those of peers. Overall, though, comps are expected to be mixed and down.

"May comps have been difficult to read in light of ongoing softness cited at Limited Brands and Chico's FAS, [and] cautiously optimistic comments from American Eagle Outfitters," Margaret Mager, specialty analyst at Goldman Sachs, wrote in a research note. Mager said results would likely be offset by "positive comments or guidance on May trends during first-quarter conference calls from TJX Cos., Polo Ralph Lauren, Phillips-Van Heusen and Coach."

Mall traffic trends continue to be negative, down an estimated 7 percent for the first three weeks of the month, according to a report by Soleil Group.

In the specialty sector, analysts at Morgan Keegan & Co. expect teen retailers to be up 2 percent for May and women's apparel to be down 2 percent.

Zumiez Inc. and American Eagle Outfitters Inc. are expected to be the top two teen performers, driven by a compelling summer mix and trend-right merchandise. Aéropostale Inc. also is expected to be in positive territory, up against easy comparisons. Abercrombie & Fitch Co. continues to suffer from a lack of bottoms, and analysts at J.P. Morgan forecast that sales in stores open at least a year would be down 4 percent to 6 percent.

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