U.S. retailers beat sales expectations in May

Thu Jun 5, 2014 4:26pm EDT

A Costco shopping cart is shown at a Costco Wholesale store in Carlsbad, California September 11, 2013.  REUTERS/Mike Blake   (UNITED STATES - Tags: BUSINESS) - RTX13I59

A Costco shopping cart is shown at a Costco Wholesale store in Carlsbad, California September 11, 2013.

Credit: Reuters/Mike Blake (UNITED STATES - Tags: BUSINESS) - RTX13I59

(Reuters) - Average sales growth at 10 U.S. retailers, including Costco Wholesale Corp and Rite Aid Corp, topped expectations in May for a second month in a row as shoppers headed to malls in droves around the Memorial Day weekend, according Thomson Reuters data.

Sales at established stores on average rose 4.4 percent in May, higher than the 3.9 percent increase analysts had estimated, according to the Thomson Reuters' same-store sales index.

The May increase followed a growth spurt in April, when same-store sales for the group rose 6.4 percent, buoyed by the release of pent-up demand after a harsh winter that had kept many consumers home.

Most of the retail group, which excludes giants such as Walmart Stores Inc, Target Corp and Best Buy Co, exceeded or equaled sales growth in May 2013.

"It's not just warm weather," said Michael Niemira, chief economist at the International Council of Shopping Centers. "In comparison, temperatures were nearly identical to last year. Presumably [the change] is more fundamental."

Niemira said he expected sales activity to moderate in June after April and May's robust growth.

The data is more evidence that the U.S. economy is picking up momentum after slowing during the winter, when weather was colder than usual in many parts of the country.

Costco (COST.O) reported a 6 percent increase, stronger than the 4.8 percent that analysts had expected, and its shares rose more than 1 percent on Thursday.

By contrast, apparel retailers were ahead of May forecasts, but their sales growth slowed after a strong April. Gap Inc (GPS.N) reported 1 percent growth in comparable sales in May, compared with 7 percent growth in May 2013.

L Brands Inc (LB.N), which owns brands such as Victoria's Secret, managed a 3 percent comparable sales increase after 8 percent growth in April. Drugstore operators Rite Aid (RAD.N) and Walgreen Co (WAG.N) posted an average sales increase of 4.1 percent, slightly lower than analysts' estimates, but higher than the average 2.8 percent growth they had recorded in May 2013.

(Editing by Frank McGurty; and Peter Galloway)

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