EMPTY MALLS

Retail sales in June weak

07-10-2009 | AP

Job worries caused consumer confidence to drop last month, and shoppers are continuing to seek 70 percent discounts

Panama Star NEW YORK. Escalating job worries and rainy weather dampened shoppers' appetite for buying summer staples like shorts and dresses, resulting in sharper-than-expected sales declines for many merchants in June and increasing concerns about the back-to-school shopping season.

As retailers reported their monthly figures Thursday, the weakness cut across all sectors but hit mall-based clothing stores particularly hard.

Even low-priced Costco Wholesale Corp. saw a same-store sales decline compared with June last year, when stimulus rebate checks helped business.

Same-store sales — sales at stores open at least a year — are considered a key indicator of a retailer's health.

"Consumers are under severe pressure on the job front, so discretionary spending is just not happening, "said Ken Perkins, president of retail consulting firm Retail Metrics LLC. "This is not setting up well for the back-to-school season."

Many areas from the West Coast to the Northeast received two or three times their normal June precipitation last month, according to National Oceanic and Atmospheric Administration's National Climatic Data Center.

But financial worries are clearly discouraging shoppers too. The latest federal jobs report, which showed wages shrinking and higher job losses than expected in June, is increasing concerns about consumers' ability to spend in the months ahead.

Merchants are relying more now on shoppers' paychecks to fuel purchases because consumers' two other key sources of funding — credit cards and home equity loans — have shrunk. But, seeing their earnings dwindle, shoppers are continuing to seek 70 percent discounts.

Job worries caused consumer confidence, as measured by the nonprofit Conference Board, to drop in June, reversing a three-month upward trend fueled by a stock market rally that also is fizzling.

Among the biggest disappointments in Thursday's same-store sales reports were teen stalwart Abercrombie & Fitch Co., The Children's Place Inc. and Limited Brands Inc., which owns Victoria's Secret.

Wal-Mart, the world's largest retailer, has benefited from the recession as shoppers scour for deals and focus on necessities.

But discounter Target Corp., which has been stumbling because of its reliance on nonessentials like trendy jeans and towels, reported a 6.2 percent decline in same-store sales for June.