Department Stores: Worse than Car Dealers

You know your sector's in a pretty pickle if auto dealerships are outperforming you. That's the situation that department stores find themselves in today.

Retail sales, on the whole, rose for the first time in three months in May, climbing by .5% and boosted by a rebound in auto dealerships and gas stations, the Commerce Department reported. Results were in-line with analysts' expectations.

This was the largest increase since January's 1.7% jump. Most of the gain, however, came from a 3.6% uptick at gas stations, due to rising prices at the pump. Excluding autos, retail sales also grew .5% during the month, better than the .2% gain economists had expected. Sales were also up at hardware, grocery chains and health stores.

Still, while these better-than-expected numbers could conceivably signal that the worst of the recession is over, the consumer sector continues to be unable to gain traction. General merchandise stores, a category which includes department stores and discounters saw a .2% decline.

As noted above, that performance is worse than that of auto sales, which grew .5% last month -- the best showing since a 2.7% surge in January. (Although even with this increase,auto sales remain 21.5% below last year's numbers.)

Last week many U.S. retailers reported disappointing sales for May, specifically in the department store sector. During the month, sales at chain stores opened at least a year declined 4.6%, bigger than the 3% expected drop, according to the International Council of Shopping Centers and Goldman Sachs.

Macy's(M Quote) saw same-store sales slip 9.1%., while J.C. Penney(JCP Quote) tumbled 8.2% during the month. Dillard's(DDS Quote) also dropped 12% and high-end department store Saks(SKS Quote) plummeted 26.6%.