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May Sales: What Retailers Aren't Saying

May retail sales may signal a potential double dip in consumer spending.

(May sales article updated with additional commentary and analysis.)

NEW YORK (

TheStreet

) -- Retailers are blaming cooler weather and a later Memorial Day for what was a rather lackluster sales month. But few are addressing the worst case scenario: a potential double dip in consumer spending.

May was yet another month of weakness in the West Coast, Wall Street Strategies analyst Brian Sozzi said.

Costco Wholesale

(COST) - Get Report

, for one, saw sales in the region grow at a slower pace.

"The retail recession began in the West then led the recovery, and now it appears to have softened for the second consecutive month depending on the retailer you look at," Sozzi said.

Analysts also cited other factors like unemployment, stock market fears and the euro crisis, as catalysts for the weak month.

Wet Seal

(WTSLA)

, which reported one of the biggest declines, falling 5.3% in May, was one of the only retailers willing to be frank. CEO Edmund Thomas said in a statement that a pause in consumer spending most likely weighed on May results.

Target

(TGT) - Get Report

also made note of some fears, saying it expects continued volatility in the pace of the recovery.

The discounter posted a 1.3% increase in same-store sales, slightly higher than Wall Street's estimates of 1.2%. California for Target was also weaker than overall comparable sales and the company said it expects June comparable sales in the low single digits.

But others say that the calendar blip actually contributed low-to-mid-single digits for retailers. Most companies also saw an uptick in traffic heading into Memorial Day weekend, which Richard Hastings, consumer strategiest at Global Hunter Securities, views as a positive.

"If conditions were weakening, then nothing would perk up, even going into Memorial Day weekend," he said.

"Summer merchandise is so dependent on weather," Needham analyst Christine Chen said. "If it's cool you are not going to run out and buy shorts or a bathing suit."

Overall sales for the 26 retailers tracked by

TheStreet

, inched up 0.9%, with 16 companies surpassing expectations, while 10 fell short.

By sector, teen retailers were the weakest, falling 2.5% on average.

Buckle

(BKE) - Get Report

was the biggest loser of the bunch, with sales surprisingly falling 5.4%. Analysts predicted a 0.6% uptick.

Abercrombie & Fitch

(ANF) - Get Report

also missed expectations, dropping 3% compared with the 2.3% decrease Wall Street expected.

American Eagle Outfitters

TST Recommends

(AEO) - Get Report

sank 3%, more than the 2.5% decrease estimated, while

Hot Topic

(HOTT)

plunged 9%, more than the 8.3% decrease forecast.

Aeropostale

(ARO)

was a standout of the group, posting a 1% increase, rather than the 0.9% decrease analysts predicted. But the highlight of the month was the teen retailer's ability to significantly grow merchandise margins year-over-year.

Skate and surf retailer

Zumiez

(ZUMZ) - Get Report

reported a 7.1% surge, significantly topping consensus estimates of a more modest 3.6% increase.

Elsewhere, department stores grew 1.4% according to

TheStreet's

tally, while discounters spiked 5.2%.

J.C. Penney

(JCP) - Get Report

and

Nordstrom

(JWN) - Get Report

were among the department stores that missed forecasts.

Still, department stores remain on the right track, Hastings said. "Suppliers are providing better products with more coordination on demand planning, making it easier for department stores to bring the right product to the shelf closer to peak demand."

Within the specialty sector,

Limited Brands

(LTD)

was a bright spot, up 5%, compared with a 2.1% increase expected.

As expected, May was a non-event, with none of the retailers revising earnings outlook. This now positions June as the most important month for the second quarter. With a potential boost from the later Memorial Day and warmer weather, there will be little excuse for weak sales.

-- Reported by Jeanine Poggi in New York.

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