WASHINGTON — While specialty stores joined with the overall economy in registering small gains in retail sales last month, department store sales were down and yearly comparisons still show the depths of the struggling economy.
Sales at specialty stores advanced a seasonally adjusted 0.4 percent compared with April, while department stores dropped 0.7 percent, the Commerce Department reported Thursday. However, compared with a year earlier, specialty store sales decreased 7 percent to $17.3 billion and department store sales fell 7.1 percent to $15.8 billion.
All retail and food service providers reported an increase of 0.5 percent last month, but compared with May 2008, sales were down 9.6 percent to $340 billion. The uptick in overall retail sales was driven primarily by higher gas prices. The retail sales change from March to April was revised to a decline of 0.2 percent from a previously reported drop of 0.4 percent.
“Nothing in the May data suggests that the retail picture has improved,” said Bob Duffy, leader of the retail industry practice for global advisory firm FTI Consulting.
The meaningful comparison for retail sales figures is the year-to-year picture, he said, and in that respect, apparel retailers continued to struggle in May. Sales for specialty stores and department stores also declined in April and March after showing early resiliency in the first two months of the year.
“At best you could describe retail sales as being mediocre, and that may be stretching it a bit,” said John Lonski, chief economist at Moody’s Investor Services. “The severity of the contraction incurred by retailers may be easing, but make no mistake about it, retail sales are well under what had been expected as recently as a year ago.”
Investors concurred, sending the S&P Retail Index down 6.09 points, or 1.8 percent, to 329.59 on a day when the major indices barely managed to hold onto gains earlier in the session. The Dow Jones Industrial Average finished ahead 31.90 points, or 0.4 percent, at 8,770.92, after hitting a new high for the year of 8,877.93 earlier on Thursday. The S&P 500 and Nasdaq Composite finished with larger gains, advancing 0.6 percent and 0.5 percent, respectively, to 944.89 and 1,862.37.
Consumers are still coping with negative macroeconomic trends like a weak housing market and job uncertainty. Economists said consumers are willing to spend on staple items in the current climate, but not on much else. Sales of luxury goods or discretionary items, like apparel, have not improved.
“Financially stressed consumers continued in May to concentrate their spending on essentials,” said Charles McMillion, president and chief economist at MBG Information Services.
Sales in most categories were “generally either up or down modestly,” said Brian Bethune, chief U.S. financial economist at IHS Global Insight. “Overall, the state of retail sales remains weak.”
Lonski said, “Some of the gloom hanging over consumer spending is lifting; nevertheless, the outlook remains treacherous.”
Economists said retail sales results are likely to remain weak through the third quarter. Fourth-quarter results could show some year-over-year improvements, primarily because of easier comparisons to a dismal fourth quarter in 2008. As year-to-year comparisons continue to be weak for the remainder of the year, additional store closures or further market contraction should be expected, economists said.
“We will stabilize, but we’ll stabilize at the new lows,” said Duffy.
On Wall Street, retail declines were the norm, with only a few exceptions. Destination Maternity Corp. checked in with an 11 percent rise, to $17.17, one day after reporting that it will relaunch its Two Hearts Maternity collection in Sears stores and introduce it in 100 units of Kmart, Sears’ sister division at Sears Holdings Corp.
The Talbots Inc. also went against the grain, picking up 19 cents, or 3.8 percent, to close at $5.16. The company announced the sale of its J. Jill brand to an affiliate of Golden Gate Capital on Tuesday and reported a smaller-than-expected first-quarter loss and plans for additional staff reductions on Wednesday.