Retail sales bounce isn't enough to pull everyone out of doldrums

Clothing for sale
Mark Kauzlarich | Bloomberg | Getty Images
Clothing for sale

A stronger-than-expected lift in retail sales last month wasn't enough to hoist everybody off the ground.

Though May's 0.8 percent rise in sales at clothing and accessories stores marked the category's biggest monthly gain since November, the boost was not enough to notch an increase over the prior-year period.

On the contrary, data released by the Commerce Department on Tuesday showed that sales at these stores fell 0.5 percent compared with last May, as unseasonably cool weather, steep discounts and an uninspired assortment kept shoppers' grip tight on their wallets. What's more, that 0.5 percent decline marked the category's worst monthly result on a year-over-year basis.

Even as foot traffic picked up in early June, thanks to warmer weather, pent-up demand and midyear sales promotions, analysts remain skeptical that the category's sales have turned a corner. Instead, as several of the catalysts that are expected to fuel its sales appear more short-term in nature, many remain cautious on future trends.

"Overall, May was not a bad month for retail, but the numbers contain warning signs that households are still cautious about spending," Neil Saunders, CEO of Conlumino retail research firm, told investors.

Though economic fundamentals including employment and home values are stabilizing, sales at clothing and accessories stores have had a tumultuous start to 2016. After kicking off the year with two straight months of year-over-year gains, they've notched yearly losses for the past three months.

These doldrums have been evident in retailers' first-quarter sales results, as well as their mixed outlooks for the second quarter. Whereas Lululemon last week said its solid comparable sales trends have continued into the second quarter, Urban Outfitters said in an SEC filing that its same-store sales reversed course at the start of the three-month period, and were down in the midsingle digits.

Though Urban said trends improved in mid-May, Morgan Stanley analysts were skeptical the retailer would be "able to make up all of the early May shortfall."

Department stores, whose assortment also skews toward the apparel category, reported yet another month of steep sales declines in May. Revenue in those locations was down 0.9 percent compared with April, and 5.8 percent lower than the prior-year period.

During the first five months of the year, department store sales are down 4.4 percent. Clothing and accessories stores have fared better, with revenues up 0.6 percent through May.

Outside of apparel, sales at electronics and appliance stores have also struggled, and are down 2.3 percent through May.