Retail Sales Slower in May; Analysts Say Debt a Factor

Major U.S. retailers reported sluggish May sales Thursday, fresh evidence that consumers have curbed spending because of heavy debt loads.

Tallies varied, depending on the type of retailer, but industrywide results looked weak, analysts said.

“We are in a conservative retailing climate, and the figures show that,” said Kurt Barnard, publisher of Barnard’s Retail Marketing Report, an industry newsletter.

Consumers shopped less because they were laying out more for mortgage payments and other installment debts than they did a year ago, said Jeffrey Feiner, an analyst at Merrill Lynch & Co.

Higher prices for gasoline crimped purchasing power for other items in May while some consumers may have decided to replenish savings depleted to pay tax bills in April.

Feiner also noted that consumer spending, responsible for roughly two-thirds of overall economic growth, normally slackens in the mature stage of a business cycle, which many economists believe the U.S. economy is in.

“Given the fact that we are in the seventh year of an economic expansion, we believe that the willingness of consumers to spend is certainly limited,” he said.

Chains specializing in women’s apparel fared better than general merchandisers.

“Women are busy replacing their 2-year-old warm-weather wardrobes,” said Barnard, noting that women rejected many fashions available last year and the year before partly because they disliked hemline lengths.

Gains reported by several clothing retailers appeared better than they really were; May’s sales were being compared to last year’s relatively low volumes.

An analysis by Drexel Burnham Lambert indicated that most sectors of the retailing business took in less in May than in April.