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Apparel Sales Gain 2% in June

WASHINGTON — Clothing and accessories store sales increased a seasonally adjusted 2 percent in June, following a 2.1 percent drop in May, the Commerce Department reported Friday.<br><br>Compared to June 2001, clothing and accessories store sales...

WASHINGTON — Clothing and accessories store sales increased a seasonally adjusted 2 percent in June, following a 2.1 percent drop in May, the Commerce Department reported Friday.

This story first appeared in the July 15, 2002 issue of WWD.  Subscribe Today.

Compared to June 2001, clothing and accessories store sales were up 3.3 percent. At department stores, sales in June posted a monthly gain of 0.7 percent and were flat year to year. Sales at general merchandise stores, which includes mass retailers, were up 1.1 percent in June against May and surged 8.2 percent over the 12-month period.

According to Commerce retail sales overall, were up 1.1 percent in June against May on a seasonally adjusted basis. Compared to June 2001, sales rose 3 percent.

There are mixed opinions as to whether June’s relatively upbeat retail sales report can be sustained, as consumer confidence ebbs and businesses weigh the impact of stock market declines in the wake of corporate accounting scandals.

Carl Steidtmann, chief economist with Deloitte Research, said he’s fairly bullish about sales strengthening at apparel retailers, especially when compared to last year’s poor showing. Steidtmann cited increases in home refinancings that put money in consumer’s pockets as one signal buying will continue.

He doesn’t expect the stock market declines to dampen consumer spending, since most investments are long-term. As an example of demand, Steidtmann cited two apparel supplier clients, whom he declined to identify, as receiving requests to expedite deliveries.

“The overall apparel business is certainly out of the woods,” Steidtmann said.

Despite the positive news for demand, he noted that consumers remain price conscious. However, he said retailers are in a good position to offer lower prices, since the cost of wholesale goods continues to drop.

More cautiously, Frank Badillo, senior retail economist with Retail Forward, said, “These latest numbers show consumers are continuing to keep pace with their spending. At the same time there are questions whether this can hold up.”

Lower gas prices and home refinancings are giving consumers more cash, agreed Badillo, but there is “unemployment in the pipeline and it could make consumers pull back.”

He said a plus side for clothing merchants is that inventories aren’t experiencing backlogs.

John Mothersole, a senior economist with the WEFA Group, said it’s questionable whether consumer spending will continue to climb in the near term because of the cloud cast by the accounting scandals, in addition to turmoil in the Middle East.

He added, “We do see growth improving later in the third quarter and into the fourth quarter.”