UPDATE: Gas Prices, Economy Leave Retailers With Mixed May Sales

Consumers went shopping in May, but high gasoline prices and an uncertain economy resulted in subdued results for retailers during the month.

Retailers that sell gasoline at their sites and upscale merchants turned in the best growth, with both continuing to see strength while the momentum of many other retailers waned.

Costco Wholesale Corp. (COST), for instance, reported a 13% rise for May at stores open more than a year. Analysts were expecting an 11.2% increase. Without gasoline sales and beneficial foreign exchange rates, Costco said same-store sales would have been up just 7%.

BJs Wholesale Club Inc. (BJ), another warehouse club, reported a 7.4% rise in comparable-store sales when 7.1% was expected. Same-store sales without gas would have been 3%, the company said.

Saks Inc. (SKS) reported a 20.2% jump in same-store sales, aided by the calendar shift of a big spring sale. Analysts had projected a 6.5% gain. Fellow high-end retailer Nordstrom Inc. (JWN) reported a 7.4% rise when 5.9% was expected.

In addition to their customers being less affected by higher gasoline prices, "the high end has done a better job of controlling inventories, leading to further momentum in full price selling, which seems to be aiding both the top and bottom lines," said Michael Exstein, retail analyst at Credit Suisse.

Other retailers produced less vibrant sales for the month. Target Corp. (TGT) saw same-store sales rise 2.8%, when 3.5% was expected. The mass merchant's showing was at the low end of its expected range as customers continued "to shop cautiously" while dealing with high gas prices and other inflationary pressures, Chief Executive Gregg Steinhafel said. Target said its May comparable-store sales were strongest in its low margin grocery business.

Department stores turned in a disappointing showing for the most part. J.C. Penney Co. (JCP) said comparable-store sales declined 1%, while analysts were expecting a 3.3% rise. Fellow department store Kohl's Corp. (KSS) reported growth of 0.8%, below analysts' projections for 2.8%.

Macy's Inc. (M) was an exception among mid-tier department stores. The retailer Wednesday posted a 7.4% rise in same-store sales when a 5.6% increase was expected, and it lifted its full-year same-store sales estimate. Chief Executive Terry Lundgren said all units, from Macy's to upscale Bloomingdales and all online operations "met or exceeded our aggressive expectations."

The 25 retailers tracked by Thomson Reuters posted 4.9% growth in May same-store sales, missing expectations for a 5.4% gain. This is retailers' first miss since December. The results follow 2.6% growth a year earlier.

"There is a shakiness in the overall economy and it is being reflected in the numbers that are coming in from retailers," said Janet Hoffman, managing director of the retail practice at Accenture. "The cards are stacked against the consumer right now and retailers will have to work hard to bring them into stores."

Even Victoria's Secret operator Limited Brands Inc. (LTD), which has been on a tear, posted a 6% rise in same-store sales, shy of the 7% Wall Street was looking for.

Gap Inc. (GPS) continued to struggle. It's same-store sales fell 4% when a 1% decline was expected.

Mixed results were seen by teen retailers, considered a good barometer of discretionary spending. Buckle Inc.'s (BKE) 8.8% gain beat the average expectation of 6.3% while Zumiez Inc.'s (ZUMZ) 7.8% rise edged out expectations for a 7.5% gain. But sales for both Hot Topic Inc. (HOTT) and Wet Seal Inc. (WTSLA) fell short of forecasts.

Some retailers that missed expectations said the economy and weather seemed to have played a role. Destination Maternity Corp. (DEST) posted an 8.6% drop in comparable-store sales when analysts were looking for a 1% decline. Chief Executive Ed Krell pointed to "the continued difficult environment for the consumer" and "severe storms and flooding" that ripped through parts of the country during the month.

Apparel retailer Cato Corp. (CATO) cited "continuing economic uncertainty" as it posted a 3% drop in comparable-store sales. Analysts had projected sales would be flat.

Aggressive Memorial Day sales toward the end of the month may have provided some aid to retailers' May showing. "'Value" retailers offered 30% to 65% off seasonal apparel and home merchandise, while "better" retailers held markdowns in the 20% to 50% range," said Marie Driscoll, retail equity analyst at Standard & Poor's Corp.

Stage Stores Inc. (SSI) didn't go the markdown route and ended up missing expectations. The regional department store reported flat same-store sales when a 3% gain was expected. "Our events in the back half of the month were not promotional enough to sustain the first half momentum," Chief Executive Andy Hall said.

Retailers were already looking at an uncertain second half of the year because of price increases they will put in place to offset higher cotton and labor costs. Now, they are facing further headwinds from higher gasoline and food costs, and from continued high unemployment.

U.S. consumer confidence fell to the lowest level since November 2010 in May. And housing prices moved closer to a double-dip decline after improving slightly early last year when the U.S. government was offering a tax credit for purchases.

-By Karen Talley, Dow Jones Newswires; 212-416-2196; [e-mail]

-Caitlin Nish contributed to this story.