NEW YORK – American consumers, uninspired by this season's fashions and rattled by high gas prices and the weak housing market, shopped gingerly last month, extending the misery of retailers who have struggled with a spending slowdown since February.
As merchants reported their June sales results Thursday, the disappointments cut across many segments of the industry including Macy's Inc. (M), AnnTaylor Stores Corp. (ANN) and trendy apparel chain Bebe Stores Inc. (BEBE) One notable exception was Wal-Mart Stores Inc. (WMT), whose renewed emphasis on low prices helped drive sales gains above analysts' expectations.
"Retail sales are generally soft as we expected. Consumers look like they are holding back on discretionary purchases particularly in apparel," said Ken Perkins, president of RetailMetrics LLC, a research company in Swampscott, Massachusetts. He added that shoppers are "facing a long list of headwinds as they head into the rest of the summer."
According to Thomson Financial's latest sales tally, 12 retailers beat results, while 16 merchants missed projections. The sales tally is based on same-store sales, or business at stores open at least a year. They are the industry standard for measuring a retailer's health.
Retailers of what are known as discretionary merchandise such as apparel and home goods are coming under increasing pressure as consumers are forced to pay more for food and gasoline. The still-weakening housing market is also making shoppers shy about spending. But retailers have problems of their own, including a continuing absence of must-have fashions; this season's clothes, including baby doll style blouses, has not clicked with many women.
Wal-Mart, the world's largest retailer, had a 2.4 percent gain in same-store sales, beating the 0.8 percent predicted by analysts polled by Thomson Financial. The company said its aggressive price reduction strategy helped boost results, and it promised more aggressive price cuts for the back-to-school season.
"Consumers continue to be challenged financially, with more pressure on discretionary spending," said Eduardo Castro-Wright, Wal-Mart Stores U.S. president and chief executive officer, in a statement. "Gas prices have moved to be their chief concern in our latest survey and they appreciate the opportunity to save on everything."
The company said that as in the past four months of its fiscal year, grocery sales continue to be stronger than general merchandise. One exception was the entertainment category; flat-panel televisions, MP3 players and video game hardware enjoyed stronger gains compared to a year ago. Still, Wal-Mart continues to struggle with weak sales in its home and apparel areas.
Meanwhile, Costco Wholesale Corp. reported a 6 percent gain in same-store sales, in line with the 6.1 percent estimate.
Macy's suffered a 2.7 percent drop in same-stores sales, worse than the 0.8 percent decline expected.
J.C. Penney Co. Inc. (JCP) had a 1.5 percent decline in same-store sales in its department store business, less than the 3.6 percent analysts expected. The retailer said sales picked up toward the end of the month, reflecting a strong initial response to back-to-school merchandise.
Limited Brands (LTD) had a 3.0 percent gain, slightly better than the 2.9 percent forecast.
AnnTaylor suffered an 8.4 percent drop in same-store sales, dragged down by its lower-priced Loft division. Analysts expected a 4.7 percent decline.
Among teen retailers, Bebe posted a 5.4 percent drop in same-store sales, worse than the 2.2 percent projected decline. But Pacific Sunwear of California Inc. posted a 4.5 percent same-store sales increase, better than the 3.2 percent estimate.
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