The nation's major retailers posted lackluster May sales and analysts said the results were consistent with the weakening in consumer demand that has accompanied the rise in credit costs this year.
Consumers are shopping less because they are laying out more for mortgage payments and other instalment debts than they did a year ago, said Jeffrey Feiner, an analyst at Merrill Lynch & Co.The slowdown in consumer activity was the intended outcome of the Federal Reserve Board's credit-tightening efforts over the winter. The central bank sought to cool consumer spending - which accounts for two-thirds of overall economic growth - to keep inflation from overheating.
Feiner also noted demand normally slackens in the mature stage of a business cycle, which 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.
As usual, the May tallies varied depending on the type of retailer. Department stores and other chains specializing in women's apparel seemed to fare better than general merchandisers. Some retailers' results appeared better than they really were because they were being compared with relatively low volumes a year earlier.
Sears, Roebuck and Co., the nation's biggest merchant, said its sales in the four weeks ended May 27 rose 5.3 percent to $2.5 billion from $2.38 billion in May 1988. Sales at stores open at least a year, called same or comparable sales, rose 3.1 percent.
Retailers and industry analysts consider same-store sales a more accurate indication of a company's performance than totals that include sales at newly opened stores. Not every retailer discloses their results on this basis.
Wal-Mart, currently ranked No.3, said its May sales rose 25 percent to $2.03 billion from 1988's $1.63 billion. On a comparable-store basis, its sales increased 11 percent.
Second-ranked K mart Corp. reported a sales increase of 2.5 percent for the four weeks ended May 24 to $2.19 billion from the previous year's $2.14 billion.
K mart had predicted that its take would be disappointing and attributed the weakness to sluggish demand for clothing, especially ladies' wear.