Retailers' July sales reports showed an increasing shift toward buying necessities including food and household supplies at discounters and away from discretionary spending on clothing, leaving the outlook for back-to-school shopping in question.
With the benefits of the government stimulus checks fading and jobless claims at a six-year high, the concern is how much shoppers squeezed by high gas and food prices will retrench in the months ahead.
Wal-Mart Stores Inc. and Costco Wholesale Corp. posted solid gains. But July results for Wal-Mart fell slightly short of Wall Street forecasts. The company said shoppers are increasingly running out of money and projected that sales would slow in August as the benefits from the stimulus checks dry up.
Meanwhile, many mall-based apparel stores, including Limited Brands Inc. and Gap Inc., suffered even deeper declines. Luxury stores including Saks Inc., which operates Saks Fifth Avenue, also struggled.
Digital Access for only $0.99
For the most comprehensive local coverage, subscribe today.
The International Council of Shopping Centers-UBS sales tally of 38 stores reported a 2.6 percent increase in July, in line with the 2.5 percent pace seen since the beginning of the industry's fiscal year, which starts in February. The tally is based on same-store sales – those at stores open at least a year – and are a key indicator of a retailer's health.
July's results met ICSC's projections for a 2 percent to 3 percent gain, but the pace was much slower than the 4.2 percent gain in June, which was helped by the stimulus checks.