Retailers this morning posted sales declines for August as shoppers held back on back-to-school purchases and continued to focus on necessities, raising further concern about the upcoming holiday season.
Early reports showed 11 retailers missed analyst expectations, while 10 exceeded estimates, according to a poll by Thomson Reuters. The winners were mainly discounters, while more upscale chains fared worse.
“It really was all about value and price proposition here,” said Ken Perkins, president of retail consulting firm Retail Metrics. “If you’re off-price or discount-oriented and conscious of price points you fared very well in August.”
There have been some signs of a stabilizing economy. On Tuesday, the U.S. manufacturing sector grew in August for the first time in 19 months. Also, a gauge of future U.S. home sales rose more than expected in July to the highest point in more than two years.
But any recovery will have to include an uptick in consumer spending, because it accounts for about 70 percent of economic activity. Thursday’s results showed continued widespread sales declines.
Perkins expects sales in stores open at least a year to fall 3.4 percent in August, not as bad as July’s 4.7 percent drop.
August is expected to be the 12th consecutive month of declines in the measurement, considered important for retailers because it removes the effects of expansion.
Discounter Target Corp. said sales at established stores dropped 2.9 percent, much better than the 5.1 percent drop analysts expected. Health care products were strong sellers, while apparel and home products were weaker.
Meanwhile, warehouse club operators Costco Wholesale Corp. and BJ’s Wholesale Club Inc. both reported results fell but also beat analyst expectations. Food remains a best seller and the clubs while apparel and jewelry were weaker.
TJX Cos., which operates discount chains TJMaxx and Marshall’s, said its 5 percent increase topped expectations as consumers hunted for bargains.
Upscale retailers meanwhile reported a weak month. Saks Inc. said results dropped more than analysts expected and Nordstrom Inc. said sales in stores open at least a year fell 7.6 percent, although analysts predicted a steeper drop.
Department stores remained a weak sector. Macy’s Inc. said sales at established stores dropped 8.1 percent in August, a larger decline than analysts predicted. (AP)
