updated 7/6/2006 9:57:22 AM ET 2006-07-06T13:57:22

Retail sales growth stalled in June, leaving merchants wondering whether shoppers who were resilient for much of the year are now curbing their spending because of higher gas prices.

Major Market Indices

As the nation’s retailers reported their monthly sales Thursday, disappointments included Wal-Mart Stores Inc., Federated Department Stores Inc. and Limited Brands Inc. There were also the usual laggards — Gap Inc. and Pier 1 Imports Inc., which again suffered sales drops. Winners included Target Corp., J.C. Penney Co. Inc. and AnnTaylor Corp.

“It’s a mixed bag, but it is definitely slower,” said Jharonne Martis, an analyst at Thomson Financial. “Consumers’ discretionary spending is decreasing as the economy is slowing down.”

The International Council of Shopping Centers-UBS sales tally of 54 stores rose 2.6 percent in June, the low end of the projected 2.5 percent to 3 percent range. The tally is based on same-store sales, or sales at stores opened at least a year. Same-store sales are considered a key measure of a retailer’s health.

June’s results were below the 4.1 percent gain averaged in the first five months of the calendar year.

June, the second most important month of the year in a retailer’s calendar behind December, is the period when merchants start to clear out summer goods to make room for fall merchandise.

Stores had some big challenges last month. Rainy weather, particularly in the Northeast, made selling summer clothes difficult. Results were also hurt by comparisons with June 2005, when the same-store sales tally rose a robust 5.2 percent, helped by warm weather.

But analysts worry that consumers are starting to feel the effects of increasing economic pressures including higher gasoline prices and interest rates. Higher rates have also helped cool the housing market. Last week, the Federal Reserve raised short-term rates to the highest point in more than five years but also lifted hopes that a respite from two years of increases might be in the offing.

Stores have feared a slowdown in consumer spending in the second half, but the question is how deep and when will it start.

Economists are closely watching the job market, a key factor in spending and which has remained healthy despite a spring slowdown. The Labor Department reported Thursday that the number of Americans filing new claims for unemployment benefits declined slightly last week, falling 2,000 to 313,000.

Wal-Mart, whose low-income customer is most vulnerable to higher energy costs, has said it started feeling the pain from the pump earlier this spring. In June, the world’s largest retailer reported a same-store sales increase of 1.2 percent, below the estimates of analysts surveyed by Thomson Financial; they predicted a gain of 2 percent.

Tom Schoewe, executive vice president and chief financial officer of Wal-Mart, noted in a news release Thursday that Wal-Mart continues to see customers making fewer trips to the store because of higher gas prices.

“The priority in spending by our customers is on food and consumables,” said Schoewe, who also noted that cooler weather in some regions of the country helped to soften sales of seasonal merchandise.

But discount rival Target enjoyed a 4.8 percent gain in same-store sales in June, exceeding Wall Street’s 4.3 percent estimate.

Costco Wholesale Corp. reported same-store sales increase of 6 percent. Analysts expected a 6.9 percent gain.

Results at department stores, which had shown a rebound earlier this spring, were mixed. Nordstrom had a 4.7 percent gain in same-stores sales, slightly below the 4.9 percent estimate.

Federated, which acquired May Department Stores Co. last year, had a 1.7 percent increase in same-store sales. That was below the 2.8 percent estimate from Wall Street. Same-store sales include only Macy’s and Bloomingdale’s results.

But Penney had a 4.3 percent gain in same-store sales in its department store business, better than the 2.8 percent Wall Street expected. And Saks Inc., which has been shedding its mid-market department store chains to focus on its luxury business, had a 4.7 percent gain in same-store sales, above the 1 percent estimate.

Limited reported a 3 percent increase in same-store sales, below the 5.1 percent forecast.

AnnTaylor continued its sales momentum, posting a 12.5 percent increase in same-store sales for the month, surpassing the 6.1 percent estimate.

At Children’s Place, same-stores sales rose 14 percent, better than the 10.8 percent projected by Wall Street.

Gap posted a 6 percent drop in same-store sales, worse than the 5.1 percent estimate.

Home furnishings retailer Pier 1 posted a 18.4 percent drop on weaker customer traffic, missing expectations for a smaller decline of 14.1 percent

Teen retailers, whose results had rebounded in recent months, had generally disappointing results.

Abercrombie & Fitch Co. suffered a 4 percent decline in same-stores sales, worse than the 0.3 percent gain analysts had projected. Pacific Sunwear of California Inc. suffered a 2.7 percent drop in same-store sales, worse than the 0.5 percent decline projected.

But Bebe Stores Inc. posted a 3.5 percent gain for June, matching Wall Street estimates.

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