By  on June 1, 2009

Retail shares rose 1.8 percent last week, but fell in May as tough first-quarter results and dour projections tempered hopes for a consumer comeback later this year.

The S&P Retail Index dropped 6 percent last month to end at 318.92. The Dow Jones Industrial Average advanced 2.7 percent last week and increased 4.1 percent for the month to close Friday at 8,500.33.

Some, such as Wal-Mart Stores Inc., held their own in the first quarter, but most could only note the rate of their bottom-line decline had slowed.

“I don’t think we have a crystal ball but it certainly feels better than it did in the fourth quarter,” said Millard “Mickey” Drexler, chairman and chief executive officer of J. Crew Group Inc. The company reported a 33 percent drop in first-quarter earnings after posting fourth-quarter losses.

Still, investors embraced that improvement and drove the stock up 26.4 percent Friday to $25.86. J. Crew jumped 50.3 percent in May. Wal-Mart’s stock dipped 0.8 percent for the month to $49.74.

Fashion and retail are caught in the tidal forces of the global recession. But there are signs government stimulus spending is helping to put a floor below the European economy, said a report from Standard & Poor’s. The U.K. gross domestic product fell 1.9 percent in the first quarter as the GDP in the 16-country Eurozone declined 2.5 percent.

“We anticipate that growth in the next few quarters will edge upward, but will likely be followed by an extended period of well-below-trend growth,” said Jean-Michel Six, S&P’s chief economist for Europe. “This is because the forces acting against consumer spending remain substantial, namely the increasing pace of job shedding, continuing losses in household wealth and the stabilization in consumer price inflation.”

Last month, shares of U.K. retailer Marks and Spencer Group plc fell 16.3 percent to 283.50 pence, or $4.52 at current exchange. But European-based luxury firms were on the rise, with PPR up 6.8 percent to 59.22 euros, or $82.18, and LVMH Moët Hennessy Louis Vuitton ahead 4.1 percent to 58.53 euros, or $81.22.

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