June's Weak Retail Sales Darken Outlook for Back-to-School

June's tepid retail sales numbers are already casting a pall over the industry's outlook for autumn -- and they may bode ill for the winter, too.

Though right now, we're all thinking more about the broiling heat of midsummer, July is when back-to-school shopping season launches -- a key period for the nation's stores. And back-to-school, in turn, often sets the tone for the biggest shopping spree of the year: the winter holidays.

Sales for the 20 chains in the Thomson Reuters same-store sales index rose a meager 0.1% year over year, compared to a 6.7% jump a year earlier. Retailers such as Macy's (M), Target (TGT), Kohl's (KSS) and Costco (COST) all missed analysts' sales forecasts.

Although Macy's registers busily rang up its Father's Day promotions, same-store sales overall barely budged in June, inching up just 1.2%.

"June sales were below expectations," Terry Lundgren, CEO of Macy's, said in a statement. "In part, this was a function of a macroeconomic environment that is stagnant at best."

Gregg Steinhafel, CEO of Target, echoed that in his own statement: "Our June comparable-store sales were near the low end of our expected range," he said.


And retailers shouldn't expect shoppers to be opening their wallets wider anytime soon.

"We expect sales to remained pressured in July, driven by a softer macroeconomic environment," said Deborah Weinswig, retail analyst for Citi (C).

That should lead retailers to step up the discounts this back-to-school season, hoping to lure shoppers into stores, Weinswig says. And that includes high income consumers, whose spending has tapered off, she noted.

But if merchants want to grab shoppers' attention, they'll have to up their fashion game, Weinswig said.

The clothing choices at chains ranging from Macy's and Kohl's to upscale Nordstrom (JWN) and Saks (SKS), left shoppers cold in June, and the retailers reported sales weakness in their apparel mix.

There is a "lack of compelling new fashions," Weinswig said.

But there's one potential bright spot: Declining gas prices might give shoppers a little more discretionary income, which could draw them back into stores, she said.

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ken herman

What would a pro athletic team owner say to a manager that couldn't get his team out of last place for 4 years and then says all he needs is another 4 years to turn things around? The same thing we're going to say in November.

July 09 2012 at 8:43 AM Report abuse -3 rate up rate down Reply
1 reply to ken herman's comment
chris1011

What would you say if the opposing team hogs the ball and never shoots for the basket, trying to run out the clock? Would you fire all the opposing team members and vote in Democrats to congress to get the ball rolling again?

July 09 2012 at 3:00 PM Report abuse rate up rate down Reply
Delaware Jack

Obama .. democrats ... & liberal news media newest claims for BO Never taking any responsibility for America's calamitous economy ..... " I ran out of gas. ... I had a flat tire.... I didn't have enough money for cab fare.... My tux didn't come back from the cleaners.... An old friend came in from out of town.... Someone stole my car..... There was an earthquake.... A terrible flood..... Locusts! .....IT WASN'T MY FAULT, I SWEAR TO GOD!

July 09 2012 at 6:52 AM Report abuse -3 rate up rate down Reply
fakeconomics1

Sorry --S/B Vague-- not Vahue--

July 08 2012 at 11:52 PM Report abuse rate up rate down Reply
fakeconomics1

Hey soundprogs,

Our economic and social system is based on Keynesian policy----Look at Medicare, Social Security, Tax Deductions, Vahue Tax Codes and Tax Cuts, Free Schools and Free Lunch at schools, Govt Grants, Free Land for oil companies for drilling - you can go on!!!!!!!!

July 08 2012 at 11:51 PM Report abuse rate up rate down Reply
soundprogs

We need to get rid of obama -- his keynesian policies have not created a work friend environment... in fact besides creating a host of uncertainties, it has increased this country's debt to unprecedented levels (more than all past Presidents combined).
One thing I agree with Bill Clinton on is that we have slipped back into recession.

July 08 2012 at 9:19 PM Report abuse +1 rate up rate down Reply
kafienkarl

The Mormon Money Mitt from Massachusetts is being called the savior. Unless of course you've listened to Santorum and Gingrich. Here's a guy who's the "daddy" of Obamacare. Yup he signed into law as governor of the state of Massachusetts RomneyCare which has an "individual mandate" and a fine/penalty if you refuse to purchase/have personal coverage. There's plenty of evidence/people who know/heard said his plan RomneyCare would be a model for the country. In the recent Supreme Court ruling on ObamaCare Judge Scalia said it's not a tax but Roberts has siad it is. My understanding it's a semantics game as the penalty is managed by the ta peeps. Romney will say what ever it takes ask Gingrich and Santorum.

July 08 2012 at 7:41 PM Report abuse +2 rate up rate down Reply
n5monthsocrapleft

WALKER WON BY A LANDSLIDE IN WISCONSIN N ROMNEY WINS BY A LANDSLIDE ALSO ,CAUSE AMERICANS ARE SICK N TIRED OF THIS MUSLIM CLOWNS "GREAT RECESSION" N RECORD 10% UNEMPLOYMENT ~RECORD FORECLOSURES~~RECORD JOB LOSSES~ FOR THE LAST 41 MONTHS AS THEY KNOW THERE IS NO "HOPE" N NOTHING IS GOING TO "CHANGE" UNTILL THIS MUSLIM CLOWN IS REMOVED FROM OUR WHITE HOUSE IN HANDCUFFS. !

July 08 2012 at 7:37 PM Report abuse rate up rate down Reply
1 reply to n5monthsocrapleft's comment
kafienkarl

January 2009 the unemployment # was 7.6%

July 08 2012 at 7:47 PM Report abuse -1 rate up rate down Reply
1 reply to kafienkarl's comment
n5monthsocrapleft

FEB~2008 ~~> PRESIDENT BUSH'S UNEMPLOYMENT RATE WAS 4.9%~~4.9%~~4.9%

July 08 2012 at 8:04 PM Report abuse rate up rate down
kafienkarl

Immediately following the Lehman's melt down the latter part of 2008 there was record lay offs/people unemployed in quick large numbers. Around 700,000 a month. Prior to that the summer of 2008 oil reached $147.00 a barrel. The only reason gasoline went to lows toward the end of Bush's presidency was the financial melt down people weren't spending on anything in large numbers. When this perfect storm happened mortgage meltdown, financial fiasco, Great Recession and oil reaching record highs it put this economy to lows it's never been in for decades. Many financial experts and economists said often it would take 7-8 years to get close to where we were prior to 2008. This debt has building up for years. This didn't happen overnight and it won't go away overnight.

July 08 2012 at 6:57 PM Report abuse +1 rate up rate down Reply
1 reply to kafienkarl's comment
n5monthsocrapleft

NOTHING BUT RECORD 10% UNEMPLOYMENT RATE FOR THE LAST 41 MONTHS N THEY TRY TO BLAME IT ON PRESIDENT BUSH WHO HAD A 4.9 UNEMPLOYMENT ,TODAY THERE HO "HOPE" N NOTHING IS GOING TO "CHANGE" UNTILL THIS MUSLIM CLOWN IS REMOVED FROM OUR WHITE HOUSE IN HANDCUFFS ALONG WITH HIS "GREAT RECESSION"

July 08 2012 at 7:32 PM Report abuse rate up rate down Reply
2 replies to n5monthsocrapleft's comment
whackjobtwo

BIRTHER CLOWN,.....IM STILL WAITING FOR MITT MORMONBOT TO BOAST ABOUT GEORGE BUSH'S RECORD. I BET I'LL NEVER HEAR HIM DO IT.......LOL!

July 08 2012 at 9:58 PM Report abuse -1 rate up rate down
n5monthsocrapleft

WHAT ARE YOU STUPID LIKE OBAMY ?~~PRESIDENT BUSH HAD A 4.9 UNEMPLOYMENT RATE N A 14000 '"PLUS" STOCK MARKET~`RETIREMENT PLANS INCREASING~~HOME PRICES APPRECIATING N WILL GO OUT AS ONE OF THE BEST PRESIDENTS OF OUR ERA . !

July 08 2012 at 11:25 PM Report abuse +1 rate up rate down
dquandle

When a huge portion of the populace isn't paid sufficiently to get by, its pretty damned ridiculous to expect them to be buying vast amounts of anything. They certainly will not be shoring up a retail based economy anytime soon. We need an at least $10 per hour minimum wage, in all industries throughout the country, and need to have the bankers, insurance industry, pharma, oil industries etc. jailed and their criminal profits confiscated and returned to the deathly ill economy as bailouts of the populace, and complete write-offs of criminal loans and mortgages.

July 08 2012 at 6:23 PM Report abuse +2 rate up rate down Reply
rrarizona

The Obama economy continuing it's magic. OMG-Obama MUST Go in 2012!

July 08 2012 at 4:27 PM Report abuse +1 rate up rate down Reply