High prices for food and gasoline, a sluggish economy and picky shoppers going to fewer stores hurt sales at big retailers in May and are likely to weigh on results for the rest of the year.

More than 60 percent of the 24 retailers tracked by Thomson Reuters missed analysts' estimates, including Victoria's Secret owner Limited Brands Inc , Target Corp , Gap Inc and J.C. Penney Co Inc , TJX Cos Inc and Kohl's Corp .

Our guests continue to shop cautiously in light of higher energy costs and inflationary pressures on their household budgets, said Target Chief Executive Gregg Steinhafel.

For May, the discount chain posted 2.8 percent rise in same-store sales, a key gauge of a retailer's health.

That was below analysts' average estimate for a 3.5 percent gain and at the low end of company expectations. Steinhafel cited a slowdown in traffic in the back half of the month, which included the U.S. Memorial Day holiday that unofficially starts summer.

Overall, sales at stores open at least a year rose 4.9 percent in May, below the 5.4 percent increase that Wall Street expected.

TJX, which runs the off-price TJ Maxx and Marshalls chains, posted a weaker-than-expected 2 percent gain, citing unseasonably cold and wet weather.

For a graphic on May same-store sales, see http://graphics.thomsonreuters.com/11/05/US_SSSPVWB0511_SC.gif

Gap shares were down 1.9 percent at $18.54 in midday trading on Thursday, while J.C. Penney fell 2.8 percent to $33.03 and Limited was down 3.7 percent at $37.27.

The Standard & Poor's Retail Index <.RLX> was down 1 percent, slightly underperforming the wider S&P 500 index <.SPX>, which was down 0.5 percent.


Retailers that beat estimates in May were generally those with a large array of products, what consumers saw as good prices, or those that cater to higher-income consumers.

Costco Wholesale Corp and BJ's Wholesale Club Inc joined Macy's Inc on Thursday in reporting higher-than-expected same-store sales. Others that topped estimates include Ross Stores Inc and luxury department stores Saks Inc and Nordstrom Inc .

Also on Thursday, data showed new U.S. claims for unemployment benefits fell last week, but not enough to assuage fears the labor market recovery has taken a step back.

I do not think all is well in Consumerland, Wall Street Strategies analyst Brian Sozzi said, noting results are likely to worsen in the second half of the year as manufacturers of food, clothes and other consumer products push through price increases meant to offset rising commodity costs. The International Council of Shopping Centers is expecting same-store sales to rise 4 percent to 5 percent in June, or 3 percent to 4 percent excluding the impact of gas.

Michael Niemira, the group's chief economist, said trends moving into the second half of the year were far more negative and consumer spending could be hurt further in 2012 when this year's payroll tax reduction disappears and if interest rates rise.

We have seen a little slowing in the economy. That is sort of rippling through various numbers, Niemira said. I worry that, as you look beyond the end of this year into early next year, the factors will increasingly become more difficult for the consumer.

For investors, that translates to uncertainty about the direction of both consumer spending and retailers' profit margins, given rising sourcing costs and consumers' preference for discounts, said Walter Stackow, an analyst at Manning & Napier Advisors, which invests in the retail sector.

Selectivity is going to be even more key than before because you don't have that backdrop of broadly increasing spending, Stackow said. But there are select opportunities where the scope for market share gains is significant and to translate that market share gain to profitability.

Nordstrom, Chico's FAS Inc and Dick's Sporting Goods Inc are among the retailers that stick out, Stackow said.

(Additional reporting by Phil Wahba, Helen Chernikoff and Dhanya Skariachan in New York; editing by Andre Grenon, Brad Dorfman and Lisa Von Ahn)