Updated from 9:22 a.m. EDT

May same-store sales were generally stronger than expected, as consumers shrugged off the impact of higher gas prices and bulked up on hot summer fashions and necessities.

"Despite record high prices for gas, retail sales actually picked up speed in the month of May," said John Lonski, senior economist at Moody's. He calculated May's overall same-store sales rise at 5.9%, compared with April's 4.6% increase.

In contrast, Thomson First Call had been expecting an aggregate 4.6% increase in May same-store sales and the International Council of Shopping Centers was calling for a 5% rise.

Nevertheless, retail sector shares were dropping in early Thursday trading, along with the broader market, as concerns flared again over oil prices.

"The market kind of grabs onto a headline and the traders take the market in that direction. Obviously, retail is one place that will get hurt," said Lynn Mander, a portfolio manager at Bryn Mawr Trust Wealth Management. Mander said she is surprised retail shares are falling, however, considering the number of same-store sales results that beat First Call's estimates.

By individual retailers,

Wal-Mart

(WMT) - Get Report

set the tone by surpassing the consensus forecast with a 5.9% increase in same-store sales; Thomson First Call had been expecting a 5% gain, and the company itself had forecast positive 4% to 6% results. The company had a 2.1% increase in May same-store sales a year ago.

By division, Sam's Club posted an 11.8% increase, compared with the 6.7% consensus estimate. Standalone Wal-Mart stores matched estimates with a 4.7% increase.

Total sales in May rose 12.8%, the company said, to $21.43 billion. The Wal-Mart stores division had a 11.7% increase in total sales to $14.39 billion, while Sam's Club posted a 12.9% rise in total sales to $2.94 billion.

The world's largest retailer by revenue said it expects June same-store sales to be up 4% to 6%, but near the low end of that range. Wal-Mart said the movement of the July 4 holiday out of its June sales reporting period and into the July one could impact sales by about 1%. The shift is expected to be partially offset by the positive impact of the movement of Memorial Day from the May reporting period into the June one.

Shares of Wal-Mart were lately up 37 cents, or 0.7%, at $56.72.

Target

(TGT) - Get Report

, however, disappointed investors with a May same-store sales gain of 4.6%, below estimates for a 5.1% increase and in line with the company's own forecast for a 4% to 6% rise.

By division, standalone Target stores also missed estimates with a 5.9% increase in same-store sales vs. the consensus for a 6.1% increase. The company's Mervyn's department stores posted a 6.5% decline, worse than estimates for a 2% drop. Marshall Field's had a 1.7% increase in same-store sales, beating the estimate for flat results.

Total sales increased 10.6% to $3.54 billion in May. Target stock was down 45 cents, or 1%, at $44.93.

Another discounter,

Costco

(COST) - Get Report

, blew away estimates, posting a 16% rise in same-store sales, compared with estimates for a 10.3% increase. Total sales were $3.8 billion, up 19%.

The company said its May sales period had 28 days, compared with 27 days a year ago, due to the Memorial Day weekend shift. Shares were up 32 cents, or 0.8%, at $39.10.

BJ's Wholesale Club

(BJ) - Get Report

said same-store sales in May were up 12.1%, ahead of the Thomson First Call consensus for a 7% increase. The company said gasoline sales contributed 2.3% to total same-store sales.

Total sales in the period rose 16.5% to $576.4 million. Some of the company's strongest sales segments were air conditioners, apparel and beer. The shares were rising 19 cents, or 0.8%, at $24.08.

One noteworthy segment, according to Lonski, was luxury retailers, who continued their streak of high-single-digit-and-above same-store sales. "That tells us that regardless of consumer sentiment, consumers are spending at a faster-than-expected pace, which strongly suggests the labor market has improved considerably, and if the labor market has improved, then we do indeed have a self-sustaining economic recovery."

Saks

(SKS)

posted a 9.4% increase in same-store sales, beating the consensus for a 6.2% rise;

Nordstorm

(JWN) - Get Report

also reported a 9.4% increase in same-store sales vs. expectations for a 6.1% increase; and

Neiman-Marcus

(NMGA)

said late Wednesday that May same-store sales increased 8.5% vs. the 7.8% estimate.

Still, Saks shares were down 16 cents, or 1.1%, at $14.76; Nordstrom shares were down 55 cents, or 1.3%, at $40.83; and Neiman-Marcus shares were off 48 cents, or 1%, at $51.

Lonski expects total May retail sales to be up 8.1% from a year ago. "Consumer spending tends to suggest that the additions to personal income, owing to faster jobs creation, have swamped the loss of purchasing power of higher energy prices," he said.

Elsewhere,

Gap

(GPS) - Get Report

also beat expectations, posting a 6% rise in total May same-store sales vs. the consensus for a 4.9% increase. Total sales were up 7% at $1.2 billion. Gap shares were off 8 cents at $24.39.

Meanwhile, shares of

Pier 1 Imports

(PIR) - Get Report

were dropping 66 cents, or 3.5%, at $18.10, as the company lowered its first-quarter earnings guidance after May same-store sales slid 7.6%, below the consensus for a 5.9% decrease.

The company now expects to earn 12 cents to 14 cents a share in the first quarter, down from a prior estimate for 14 cents to 17 cents a share and below the current Wall Street consensus for 15 cents a share. Pier 1 cited "disappointing" promotions over the Memorial Day and Mother's Day holidays.

Total sales in May rose 1.2% to $133.6 million, while total sales in the first quarter increased 7.3% to $432 million with same-store sales down 8%.

The company sees June same-stores sales down 7% to 9%.

Department store same-store sales were mixed.

Sears

(S) - Get Report

, for example, had 3.7% decline, worse than the consensus for a 0.1% drop. Total sales fell 4.7% to $2.08 billion. The shares were down 78 cents, or 2.1%, at $37.35.

Meanwhile,

Kohl's

(KSS) - Get Report

had a same-store sales increase of 5% that flew past estimates for a 1.7% gain, helping prove that the company's turnaround strategy is in play. The company had a 20.2% increase in total sales to $815.8 million. Kohl's shares were adding 26 cents, or 0.6%, at $47.90.

J.C. Penney

(JCP) - Get Report

reported a 9.1% increase in May comparable department store sales, compared with the consensus for a 4.1% rise. Total sales increased 7.6% to $1.22 billion.

The company forecast June same-store sales up in the low single digits, but noted that it is concerned about high energy prices and the effect on second-quarter earnings. As a result, the company maintained its previous quarterly guidance for a profit of 6 cents a share, which would compare with a loss of 3 cents a share in the year-earlier period. The consensus forecast is for 8 cents a share.

Shares of J.C. Penney were lately down 51 cents, or 1.4%, at $35.53.

Federated Department Stores

( FD) said May same-store sales increased 2.9%, compared with expectations for a 1.7% increase. Total sales rose 3.3% to $1.17 billion.

Due to the better-than-expected results, the company upped its second-quarter sales guidance to a 4% to 5% gain in same-store sales, from a previous estimate of 2% to 4%. June same-store sales are seen up 4% to 5%. The stock was down 51 cents, or 1.1%, at $47.14.

Another department store chain, however, did not fare as well.

Dillard's

(DDS) - Get Report

reported a 5% drop in May same-store sales, compared with estimates for a 1.8% increase. Total sales fell 5% to $511.4 million.

The company had struggled with negative same-store sales for a good part of last year, but had recently given investors hope with four consecutive months of positive results. The company had a 7% decrease in May 2003 same-store sales. Shares of Dillard's were tanking $1.51, or 7.3%, at $19.19.

Abercrombie & Fitch

(ANF) - Get Report

, which has also wrestled with negative same-store sales, posted a 1% rise in May's results, beating the consensus for a 0.6% increase. The company had a 7% decline in same-store sales in May 2003.

Total sales in May rose 20% to $111.5 million, Abercrombie said. The stock was down 25 cents, or 0.7%, at $36.20.

Limited Brands

(LTD)

said May same-store sales were up 3%, above estimates for a 2.4% increase and the prior year's 1% rise. Total sales in May increased slightly to $641.4 million, from $618.1 million. Shares were down 2 cents at $19.14.

Shares of teen retailer

Pacific Sunwear

(PSUN)

were getting hit in trading after the company posted a May same-store sales increase of 7.8%, below the consensus for an 8.5% rise.

Shares were lately down $1.55, or 7.2%, at $19.90.

This is just the third time in over the past year that the company has reported monthly same-store sales in the single digits. Usually they're in the double digits. The company had a 12% increase in May same-store sales a year ago.

Total May sales jumped 18.5% to $72.4 million, the company said.