Better Sales in May, or Just Higher Prices?

(MoneyWatch)  Monthly retail sales from May look OK ... not great, just OK. But can we trust those higher numbers, or do they reflect inflation, rather than better sales?

Results from the mass retailers, such as Costco (same store sales up 9 percent), B.J.'s Wholesale Club (up 6.8 percent), and Wal-Mart (up 3.9 percent), are reported net of fuel sales, which takes the 21 percent year-over-year rise in the cost of gas out of the picture. Make that the direct cost of gas -- higher materials, production, and freight costs are lifting the price of nearly everything.

The winners: Mass-market discounters, where food and other staple purchases continue to bring shoppers through the doors. Once a customer's inside, a good merchant has a fighting chance of adding a new pool floatie, a pair of flip-flops, or a television set to the basket. Department stores are losing share to discounters; $350 million in stimulus checks were cashed in Wal-Mart stores in May, CFO Tom Schoewe said in a teleconference. While grocery sales were up, so were computers and flat-screen TVs.

The losers: Clothing stores from Gap to Saks. Gap said Old Navy comps dropped 25 percent in May; Gap stores and Banana Republic were down 7 and 5 percent, respectively. At Target, men's apparel was a weak category. Hey, most guys don't like to buy clothes even in a good economy.

The takeaway: Expect more fuzzy math along the lines of Nordstrom, which reported 10.9 percent comps and sales of $716 million in May. In order to do that, however, the Seattle store chain moved its enormous Half-Yearly Sale for women and kids up a month. So when Nordstrom's June is bad, you'll know why.

Image of "freaky yellow octopus pool toy" by David Goehring, via Flickr, CC 2.2