By  on June 8, 2007

May same-store sales gave out some mixed signals. Despite higher gasoline prices and a slowdown in the housing market, sales improved overall after a dismal April in which poor weather and the loss of Easter volume cooled comps.

Still, May same-store sales continued to reflect a split between luxury and moderate consumers. Positive results in the department store sector, particularly Saks Fifth Avenue, and at specialty chains were driven primarily by luxury customers. Moderate chains that registered declines, such as Macy's and J.C. Penney Co., and mass retailers such as Wal-Mart Stores Inc., which reported a modest gain, bore most of the impact of macroeconomic factors.

"Individual companies making the right decisions on promotions and displays and inventory will continue to consolidate market shares," said Richard D. Hastings, vice president and senior retail analyst with Bernard Sands. He said the best bets for the future were likely to be wholesale clubs, Kohl's Corp. and luxury and premium specialty retailers that had innovative products, such as Saks, Nordstrom Inc. and Neiman Marcus Group Inc.

As tracked by WWD, sales figures in stores open at least a year in the department store sector fared the best, increasing 5.3 percent. Mass merchants posted a 4.1 percent gain. Specialty stores, held back by widely varied results, posted a 0.5 percent increase.

The results are largely in line with predictions dating from the start of the year that luxury would fare well, the moderate side would show a slowdown and the lower end of the retail industry would lag because of the limited spending ability of core customers, said Kevin Regan, senior managing director and retail specialist at FTI Consulting.

"What we're seeing on a macro level is that sales growth has been slowing for several months,'' Regan said. "We believe the housing sector slowdown has been a key cause. It's obviously affecting some of the key sectors in retail."

The luxury side of retail continues to thrive, which could help insulate the industry from the full effects of current economic pressures, he said. The bulk of discretionary spending for apparel and accessories is still driven by affluent consumers who continue to spend.

May comps were released as U.S. stock markets suffered their biggest losses in three months amid concerns about higher interest rates aimed at curbing inflation.

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