Retailers report sluggish July sales Retailers report sluggish July sales as shoppers are weighed down by economic worries * By Anne D'Innocenzio, AP Retail Writer * On Thursday August 6, 2009, 8:19 am EDT NEW YORK (AP) -- Shoppers -- worried about job security and finding fewer options among the sales bins -- remained tight-fisted in July, resulting in sluggish sales for many merchants and raising concern about the back-to-school shopping season's health. As merchants reported their sales figures Thursday, mall-based chains continue to be hit hardest as consumers focus on necessities. Among the big disappointments were Stage Stores Inc. and teen retailer Wet Seal Inc. Warehouse club operator Costco Wholesale Corp.'s results also came in slightly below analysts' estimates. "The consumer is stressed and depressed," said Ken Perkins, president of retail consulting firm Retail Metrics. "Back-to-school shopping season is going to be very late." He added that jobs are "everything right now," and if the pace of job losses continues to slow, consumers will start to feel better. A number of special factors also depressed July's sales results. Lean inventories left fewer clearance options for bargain hunters, as stores wanted to protect themselves from getting stuck with piles of leftovers. The shift of the sales-tax holidays from July to August in most of the 14 states that have them because of a late Labor Day weekend also stole momentum from July. Frank Badillo, senior economist at consulting group TNS Retail Forward, and other analysts have also noted that the uptick in car buying spurred by the government's "cash for clunkers" program might siphon sales from other categories like clothing and home furnishings in coming months. That could hurt back-to-school shopping as consumers shift available cash to car payments. According to an early tally by Thomson Reuters, six retailers missed sales estimates and four beat estimates. The tally is based on same-store sales or sales at stores opened at least a year. Same-store sales are considered a key indicator of a retailer's health. The projected same-store sales decline in July would mark the 11th consecutive monthly drop when excluding Wal-Mart results -- which had buoyed the industry in the spring before it stopped reporting monthly numbers. Merchants are seeing indications that sales decreases are easing. However, business remains weak even amid signs of economic stabilization. Real estate reports last week showed that home sales and prices may be on the rebound, and the shrinkage in the economy as measured by the gross domestic product eased considerably in the second quarter. But a worrisome sign for merchants -- and the broader economy of which consumer spending makes up 70 percent -- is a 1.2 percent decline in consumer spending and a 5.2 percent increase in the savings rate in the second quarter. That's been driven by worries about a weak job market that have hammered consumers' confidence. When the Labor Department releases its monthly jobs report Friday, economists expect it to show unemployment ticked up to 9.6 percent in July, close to its post-World War II high. "We are doing better than we had, but we were doing awfully bad," said Bart van Ark, chief economist at The Conference Board, a private research group. "The consumer is still very cautious." Even among the low-price operators, shoppers still remain tight-fisted when buying nonessentials, though there may be signs of easing. As Costco reported Thursday that its same-store sales dropped 7 percent in July, pressured by lower gas prices and the stronger dollar, the retailer said in a recorded message that some of its strongest categories included food and fresh food products, including deli, candy and frozen food items. It reported weakness in non-food, discretionary categories but did note a slight improvement in some areas such as office, sporting goods, small appliances and men's and women's apparel. Among mall-based apparel retailers, Gap Inc., which operates stores under its namesake, Banana Republic and Old Navy, posted an 8 percent decline in same-store sales. That's slightly less than the 8.5 percent drop analysts had expected. Wet Seal reported a 12.1 percent drop, worse than the 10 percent decline that analysts had expected. Department-store operator Stage Stores posted an 11.9 percent drop, bigger than the 8 percent decline that analysts had anticipated. Limited Brands Inc., which operates Victoria's Secret and Bath and Body Works, said same-store sales fell 7 percent. That was better than the 12.4 percent drop that analysts had expected.
No fear, the memo went out yesterday to major dept stores from the prez office. We won't mind if you fudge the numbers, America needs your support. Thanks Prez
Expectations were set so low, it would be impossible for them not to meet, and yet, some of them are missing anyways. One cannot underestimate how truly bad things are, and more importantly, how awful things are going to be going forward. Americans are still in denial as to how the ground beneath their feet is shifting, and a whole new landscape is developing, permanently.