Discounts help boost retail sales in June

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NEW YORK --- Consumers who were enticed by warmer weather and deep discounts of up to 80 percent on summer merchandise went on a buying binge in June, helping many retailers deliver the most robust revenue gains for that month since 1999.

But as the economy teeters back to life, concern among analysts is that the strong revenue momentum for what is typically the second-biggest shopping month of the year might not continue into the back-to-school shopping season as stores face pressure to pass along higher costs for everything from clothing to food.

Overall, revenue at major retailers rose 6.9 percent for June, according to the International Council of Shopping Centers' tally of 28 retailers' results. Excluding gas, the figure rose 5.5 percent.

"Promotions were the clear driver this month, and consumers took advantage of some outstanding deals," said Ken Perkins, the president of research firm RetailMetrics LLC. "But that leaves a big question mark for July and the back-to-school season. Will shoppers be willing to spend full price?"

Selina Bierra, 32, says she would not. The teaching assistant bought discounted items at Macy's two weeks ago and a pair of white pants for $10 at Old Navy on Thursday. But she snubbed another pair priced at $19.99 because she thought it could be discounted more.

"Today, jobs aren't guaranteed," Bierra said. "My friend was telling me that her work was laying off people before the Fourth of July holiday."

Brian Sozzi, a Wall Street Strategies said many consumers, particularly at the lower-income levels, feel that way. He said June's performance is indicative of the "rollercoaster" sales trend that has been prevalent this year.

"There continues to be more mixed reads on the state of the U.S. consumer than there are alcohols in a Long Island Iced Tea," Sozzi said. "The spending recovery is far from consistent."

June gains were lopsided, with discounters and luxury brands benefiting the most and results for stores serving low- and middle-income shoppers lagging.

June is historically the second most important month on a retailers' sales calendar behind December. During the month, stores typically clear out summer merchandise to make room for fall goods. But this time, it took deeper discounts than usual to get shoppers to buy.

Confidence low

Shoppers' big concerns -- weak job recovery and stagnant wages -- continue to weigh on buying decisions. These worries sent consumer confidence to a seven-year low in June, according to the Conference Board's survey released last week.

In fact, consumer confidence has never been this low in the 24th month of a recovery, according to David A. Rosenberg, the chief economist at Gluskin Sheff. Historically, confidence is at 94, not 58.5, which was recorded in June.

- Associated Press


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