A shopper walks the aisles of a Target store on Thursday in Chicago. Shoppers, worried about jobs and the overall economy, pulled back on spending in June, resulting in tepid sales for many retailers. The results raise concerns about Americans' ability to spend during the back-to-school season, which is the second-biggest shopping period of the year and starts later this month.
By Teresa F. Lindeman Pittsburgh Post-Gazette
The nation's June retail sales report card, issued Thursday, brought mixed results -- luxury retailers aced it, while other chains struggled, upping the pressure on retailers already hard at work trying to produce a successful back-to-school season.
The Fourth of July holiday may have just passed, but Target's stores are already filling up with back-to-college goods. Staples, meanwhile, has launched a Back-to-School savings pass meant to keep shoppers coming back by giving them discounts through Sept. 15 on school supplies, not including computers and calculators.
And Pittsburgh's own American Eagle Outfitters -- a teen retailer that really needs to do well during back-to-school -- is already heavily marketing its newest campaign, featuring non-actors wearing its clothes. The South Side retailer later this month will begin a social media campaign, asking customers to submit photos and then drum up votes through their social networks.
The eventual winners will be in next spring's ad campaign, but the strategy is to get buzz for American Eagle this summer.
PG graphic: Retail sales (Click image for larger version)
Getting ready for school doesn't typically trigger the type of spending sprees associated with Christmas. Still, last year the Washington, D.C.-based industry group National Retail Federation said purchases associated with going back to school and college ranked as the second-biggest consumer spending event for retailers annually.
This year's parents and students are not likely to be immune to the concerns that brought consumer confidence down in June, the fourth consecutive month of declines, according to the Conference Board.
And the retail sector's lackluster June may be another indication that shoppers are hesitant to spend. The 23 major chains that reported monthly results produced an unimpressive 0.2 percent gain in June over the same period last year, according to the New York-based industry group International Council of Shopping Centers.
"Volatility is the word that best describes the June performance," said Michael P. Niemira, vice president of research and chief economist for the shopping centers council, in his written analysis. "Weather was one factor that was cited as a drag on the overall performance, but some retailers pointed to broader economic uncertainty as well."
Factoring out the impact of drug stores, which took a hit when Walgreens exited the Express Scripts pharmacy network, chain store sales were up 2.6 percent, the trade group said, compared with a 4 percent gain in May.
Target reported its best results last month came in the sales of food and of health and beauty items. The Minneapolis retailer reported a 2.1 percent gain in same-store sales -- meaning sales at stores open at least a year -- and said it is on track to deliver its projected second-quarter results.
Macy's, which reported a same-store sales gain of 1.2 percent, said results were below its expectations, in part because of a "macroeconomic environment that is stagnant at best, and lower spending by tourists in cities such as New York."
The Cincinnati, Ohio-based department store chain also said a remodel of its Herald Square store in New York City disrupted business there.
But Nordstrom showed an 8.1 percent same-store sales gain and Saks Inc. posted a 6 percent increase, as luxury retailers had a pleasant June.
What it all portends isn't clear, but few seem to be expecting a best-in-class back-to-school season.
Ken Perkins, president of Retail Metrics Inc. in Swampscott, Mass., wrote in his analysis that the disappointing sales results could be a harbinger of more summer weakness.
Mr. Niemira, at the International Council of Shopping Centers, was similarly wary. "The back-to-school sales performance itself will be decent," he wrote, "but slower sales growth is expected in 2012 for the season than experienced in the prior two seasons."