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, the concern among analysts is that the strong revenue momentum for what is typically the second-biggest shopping month of the year may 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 sales, the figure rose 5.5 percent.
“Promotions were the clear driver this month, and consumers took advantage of some outstanding deals,” said Ken Perkins, 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 pants for $10 at Old Navy on Thursday. But she snubbed another pair priced at $19.99 because she thought the discount could be 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.”
Wall Street Strategies analyst Brian Sozzi said many consumers, particularly at the lower-income levels, feel that way. He said June’s performance is indicative of the “roller coaster” 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.”
The June gains were lopsided, with discounters and luxury brands benefiting the most and results for merchants serving low- and middle-income shoppers lagging. The figures are based on revenue at stores open at least a year, a measure considered a key indicator of a retailer’s health.
Discounter Target Corp. and club chain Costco Wholesale Corp. were among the companies that posted June results that beat Wall Street estimates. Luxury retailers like Nordstrom Inc., Neiman Marcus and Saks Inc. also posted another month of stellar gains, as wealthy shoppers have gone back to spending.
J.C. Penney, which targets middle-income shoppers, registered a sales gain that came in below analysts’ projections, and it released a disappointing profit outlook. Bon-Ton Stores, another midbrow chain, posted a decline.
During June, 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 amid worries about the economy.
Teen retailer Aeropostale, for example, offered discounts of up to 80 percent, plus an extra 30 percent off on summer items, according to Dan de Grandpre, editor-in-chief of Dealnews.com. A year ago, Aeropostale offered up to 70 percent off, he said.
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