Breakthrough at the Oaks: outside forces are giving retailers jitters about year.

Summer is not typically a season for watching retail trends, but this year, the sector is turning out to be a real nail biter.

That's because stores are having to sift through a bundle of often conflicting data as they try to determine what the climate will be for the all-important fourth quarter.

So far at least, energy prices along with a slowdown in home sales, have not had a discernable effect on retail sales--consumer spending grew at a 5.5 percent annual pace in the first quarter.

Despite high gas prices, same store sales in May turned out better than expected. Retailers posted an average 4.1 percent gain. But there are signs the market will slow as summer wears on

"I think we're going to continue to limp a little in the foreseeable future," said Alan Frank, partner in charge of the consumer business practice for Deloitte & Touche. "I think you'll continue to see companies struggle against their numbers from last year."

While that is not terrible news-retail sales have been stronger than historical averages over the past several years-it could be especially disappointing to some retailers.

Like the proverbial rising tide that lifts all ships, it has been tough to do any wrong in a climate where consumers were spending, to keep the metaphor going, like drunken sailors.

Now, as retailers make their plans for the back to school season, which starts roughly in August, and the crucial fourth quarter holiday season, they are having to guess at just how much consumers will curtail their shopping habits and which types of merchandise will be most likely to persuade them to open their pocketbooks.

"I think certain companies have some momentum, and maybe they're new or maybe they're different or maybe the concepts are fun," said Frank. "I think some of the tried and true companies that we all know and shop at that have been around for a while are going to struggle to eke out any substantial progress. They're going to try to maintain their market share and hold their position as best they can."

For the past several years, consumer spending has been running at a growth rate of about 4 percent. But economists like Scott Anderson at Wells Fargo & Co., say those rates are not likely to be sustained going forward.

"This year we expect it to trend closer to 3.5 percent and just below 3 percent next year."

The problem is that no one really knows how much energy prices or some of the other dynamics now coloring the landscape will affect consumer spending. Just as prognosticators warned of a housing bubble for several years before any slowdown in home sales were seen, most see the trends of the past few years coming to a close, but it's hard to tell whether that means some momentum may be lost, or whether it means the bottom will fall out of the retail sector.

Anderson said Wells expects that sales of autos and appliances will probably weaken as consumers, seeing the increases in their home values moderate, hold off on renovations.

But Frank points out that, as negative indicators accumulate-escalating energy prices, slowing home prices and most recently, a dip in the stock market affecting the worth of many retirement nest eggs-a broader cross-section of consumers could tighten their purse strings.

"It's not one of those things," Frank said. "You add them together and it tends to have a cumulative effect on your psyche."

So far at least, many retailers continue to prosper.

As of the close of the first quarter of 2006, Target, JC Penney Co., Kohl's, Nordstrom, Abercrombie & Fitch and Staples, all reported double digit net income increases.

Penney, with a 22 percent increase in first quarter earnings to $210 million or $0.89 per share, raised its full year guidance by $0.02 per share.

Kohl's, which in the first quarter earned $167.2 million or $0.48 per share, a 34 percent increase over the year-ago period, also raised its full year earnings guidance to the range of $2.91 to $3.02 per share, from previous estimates of $2.74 per share to $2.87 per share.

Abercrombie, which saw earnings increase 39 percent to $56.2 million or $0.62 per share in the first quarter, also raised its guidance, estimated that it would earn $1.28 to $1.33 in the first half, compared to earlier guidance in the $1.23 to $1.28 per share range.

"A lot of the disaster scenarios people have envisioned seem to still be very remote possibilities," said Anderson at Wells. "We are seeing a slowing down in the housing markets and that will affect Southern California more aggressively. But the economic impacts will be relatively minor."

Anderson believes that the equity that has been building up for homeowners over the past several years will continue to boost consumer spending, especially at the higher income levels.

"Those lower income households that tend to have higher debt levels and tend to be more exposed to economic shocks, those are the ones that are going to feel the brunt of the Fed policy," said Anderson. "Another factor is that rental increases are going to be stronger. All these factors will hit retailers like Wal-Mart that portray themselves as discount and that cultivate the lower income consumers."

Wal-Mart, Which reported net income rose to $2.62 billion or $0.63 a share, up 6.5 percent from the like quarter a year ago on a 12.3 percent sales increase, said in a call to investors that its own expenses and higher costs hitting consumers may impact its results for the rest of the year.

A report about to be released by the National Retail Federation, also appears to indicate the shopping habits are primed for a shift.

The trade group found that 76 percent of consumers believe fluctuating gas prices have impacted their shopping habits, up from 67.2 percent in 2005 and 56.8 percent in 2004.

While 44.8 percent of the respondents said they plan to drive less, 22.2 percent said they would delay major purchases such as TVs or cars.

"Higher prices at the pump act as a tax on disposable income," said Tracy Mullin, president and CEO of the NRF. "As prices continue to rise, it is inevitable that consumer spending will be affected."

SHELLY GARCIA Senior Reporter