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Retail Sales Fall Unexpectedly

Retail sales fell 1.2% in May, the first decline in eight months.

NEW YORK (

TheStreet

) -- Retail sales dropped unexpectedly for the first time in eight months in May, data that will likely reignite investor fears that a consumer recovery remains tepid and reinforcing the possibility of a double dip.

The Commerce Department said Friday that sales for the month tumbled 1.2%, even as economists forecast a 0.2% gain. This follows a 0.6% increase in April.

This is the first decline in retail sales since September 2009, when they tanked 2.2%. On a year-over-year basis, sales grew 6.9%.

Sales were particularly hurt by hardware stores, auto dealers, gas stations, department and clothing stores.

Auto sales dropped 1.7%, according to the Commerce Department.

Ford

(F) - Get Report

, meanwhile, reported a 19% surge in sales for the month, while

General Motors

saw a 32% surge for its Chevrolet, Buick, GMC and Cadillac brands.

General merchandise stores, which include discount giants

Wal-Mart

(WMT) - Get Report

and

Target

(TGT) - Get Report

, sank 1.1%, which was the biggest decline since December 2008.

There were some sectors that actually fared well during the month, including furniture, which rose 1%, and electronic and appliance stores, where sales advanced 0.6%. Health and personal care, Internet retail sales, sporting goods, hobby, book and music stores, restaurant and bars and food and beverage stores, also posted some gains.

This strength in electronics should bode well for

Best Buy

(BBY) - Get Report

, which reports its first-quarter earnings next week. "In fact, considering the weakness we saw from the mass merchants in both PC and TV categories, this could be particularly good for Best Buy's market share," Janney Capital Markets analyst David Strasser wrote in a note.

Brisk sales of

Apple's

TheStreet Recommends

(AAPL) - Get Report

iPad may have also driven some of the overall strength in electronics, Strasser said.

Video: Top Tech Stocks >>

Excluding autos, sales dropped 1.1%. The core measure, which excludes autos, gasoline and building materials, slipped 0.2%. This could prompt some to lower their second-quarter GDP outlook.

"At the core, excluding autos, building materials and gasoline receipts, retail sales were flat in May," Wall Street Strategies analyst Brian Sozzi says. "Considering the Memorial Day holiday shift, these are numbers that we think were better than many were expecting."

Earlier in the month, retailers reported lackluster same-store sales, citing a later Memorial Day holiday and colder weather. "We suspect that June's result could be improved given the calendar shift, weather, Father's Day and promotions designed to move volume ahead of back to school/back to college," Sozzi says.

Retail stocks, as expected,

were in the red Friday morning

on the disappointing data, with the S&P Retail Index declining 1.1% to 430.29.

So far, some of the biggest losers include

Macy's

(M) - Get Report

, which is down 2.4% to $20.76,

Saks

(SKS)

, which is falling 3% to $8.20 and

American Apparel

(APP) - Get Report

, which is tumbling 7.1% to $1.43.

-Reported by Jeanine Poggi in New York.

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