By  on July 29, 2010

WASHINGTON — Apparel provided a bright spot for some retailers in July, but even with an improved overall economic outlook, executives said gains were modest and they remain cautious about the future, according to the Beige Book released by the Federal Reserve Wednesday.

Based on anecdotal reports from U.S. stores, the Beige Book found several districts benefitted from strong apparel sales in recent months. Retailers in New York, especially in the city, said “sales of fashion items and apparel were particularly strong, whereas sales of big-ticket appliances were relatively sluggish.”

Retailers in Philadelphia said apparel sales benefitted from the unusually warm weather that blanketed most of the East Coast and that jewelry also showed signs of recovering. Cleveland retailers said apparel items performed well in July.

However, many Philadelphia retailers agreed with the assessment of one retail source, who said “the consumer is still cautious and looking for value.” Another retailer in Richmond said big purchases, like home improvement items, suffered as consumers “splurged small.”

Shoppers in Chicago were more focused on food and necessities, fueling a drop in spending on luxury items, according to sources in the region. Conversely, department stores in Dallas and San Francisco reported their sales improved. Dallas retailers said the increase was modest, but department stores and discount retail chains in San Francisco said sales were higher and promotional activity was down compared with previous months.

Wobbly consumer confidence levels and an uneven and reluctant recovery continued to push retailers to operate with the same conservative strategies they have since the recession began.

Looking ahead, retailers in Cleveland, Chicago and Boston were cautious. Boston sources were particularly concerned by recent consumer confidence levels, and Chicago retailers said they were deliberately maintaining low inventory levels “amid dampened optimism for the back-to-school shopping season.”

Inventory levels across the country were mixed, with retailers in many areas indicating they planned to maintain tight inventory control and keep levels significantly lower than prerecession levels, even in districts where retail sales have recovered somewhat.

Most regions also reported few changes to staffing levels in recent months.

On Wall Street Wednesday, the S&P Retail Index slipped 1 percent, or 4.07 points, to 403.65, as the Dow Jones Industrial Average fell 0.4 percent, or 39.81 points, to 10,497.88.

Fashion’s decliners included Aéropostale Inc., off 2.8 percent to $28.89; Macy’s Inc., 2.7 percent to $19.05; Nordstrom Inc., 2.5 percent to $33.61, and The Warnaco Group Inc., 2.3 percent to $41.41.

The Nikkei 225 shot up 2.7 percent to 9,753.27 in Tokyo as the SSE Composite Index jumped 2.3 percent to 2,633.66 in Shanghai and the Hang Seng Index rose 0.6 percent to 21,091.18 in Hong Kong.

European trading was mixed, with the FTSE 100 down 0.9 percent to 5,319.68 in London and the DAX off 0.5 percent to 6,178.94 in Frankfurt, while the CAC 40 inched up 0.1 percent to 3,670.36 in Paris.

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