Retailers' reports show tepid May for shoppers

NEW YORK — Shoppers are still showing some scars from the recession. In a May filled with wild stock market swings, consumers gave retailers only slim revenue gains over a terrible May 2009.
The second straight month of sluggishness after a surprisingly solid start to the year underscores both the fragility and choppiness of the economic recovery that will most likely persist at least through the fall.

The International Council of Shopping Centers index for revenue at stores open at least a year reflected such tentative spending, rising 2.6 percent in May. The figure was in line with a reduced growth forecast that ranged anywhere from 2 percent to 2.5 percent.

Michael P. Niemira, ICSC's chief economist, had originally expected a 3.5 percent gain. May's results follow a 0.8 percent gain in April, and a 9.0 percent increase in March.

"It's going to be a roller coaster," said Sherif Mityas, a partner in the retail practice at management consultant A.T. Kearney. "You're going to have fits and starts. ... Consumers are looking for threads of good news among the bad news, and that's dictating what they're spending on everything from groceries to $1,000 TVs."

Mityas said he doesn't believe a recovery will be in full swing until the fourth quarter.

Stock market worries

The choppy stock market hasn't made consumers who'd started to spend again any more confident.

"We've had our splurges. We don't need to waste any more money," said Stacy Phillips, 46, who lives in Brooklyn with her husband, a chief financial officer for an HMO. They spent $4,000 on a vacation to Iceland and Paris in early April, but now they're feeling frugal again as they worry about the stock market, which has tumbled on fears that a European debt crisis will hammer global economic growth.

"It doesn't seem like anything is happening that's making me feel better," she added.

A mix of stores found business challenging during the month.

Department store chain J.C. Penney and many teen merchants including Abercrombie & Fitch Co. and American Eagle Outfitters Inc. reported declines in revenue at stores open at least a year.

Costco Wholesale Corp. reported a gain slightly below Wall Street expectations. Gap Inc. posted a small gain overall, but its namesake chain in the U.S. saw revenue decline.

Among the bright spots were Victoria's Secret parent Limited Brands Inc. and T.J. Maxx parent TJX Cos., both of which reported bigger-than-expected gains.

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