By  on August 13, 2009

WASHINGTON — Specialty apparel retailers reported small sales gains in July, but department stores struggled and yearly comparisons reflected the impact of the recession.

Sales at specialty stores increased a seasonally adjusted 0.6 percent in July compared with June, while department stores fell 1.6 percent, the Commerce Department said Thursday.

In 12-month comparisons, sales at specialty stores fell 7.6 percent to $17.13 billion. Department store sales declined 11.5 percent to $15.13 billion compared with a year earlier.

Even the broader general merchandise category, which includes discounters like Wal-Mart and Target in addition to department store sales, showed a drop of 0.8 percent in July compared with June. The category declined 4.7 percent to $48.37 billion versus a year earlier.

“Consumer spending is still weak, and I don’t know any reason why it should be changing,” said Kevin Regan, senior managing director and retail industry expert with FTI Consulting. “The consumer really is going through a change in the way they approach their shopping habits because they are still deleveraging a lot. They are thriftier, they’re not as aspirational, and they look at things in a more disciplined way. People are just not shopping today unless they really have to.”

Consumers continue to buy basic items and necessities, but they are careful to spend only what they can afford, Regan said.

“Discretionary consumer spending is weak, especially as it pertains to apparel and general merchandise,” said John Lonski, chief economist with Moody’s Investor Services.

The employment picture, including income levels, needs to consistently improve before discretionary spending rises, he said.

The small increase in apparel sales during July could be the result of some back-to-school shoppers taking advantage of sales, said Richard Yamarone, director of economic research at Argus Research Corp.

Consumers have been programmed by recent trends to look for bargains when shopping, economists said. The government’s Consumer Price Index, which tracks retail prices, is to be released today.

All retail and food service providers reported a worse than expected 0.1 percent decrease in July versus June. Compared with a year ago, total sales dropped 8.3 percent to $342.3 billion.

The July results “pour more cold water” on predictions of recovery, said Charles McMillion, president and chief economist with MBG Information Services.

Economists said the broader sales figures for all retail and food service providers declined despite increased sales in the motor vehicles sector that benefited from “cash for clunkers” subsidies, which encouraged consumers to trade in their cars for more fuel efficient models.

“The cash-for-clunkers trade-in program led to a significant spark in sales in the hard-pressed motor vehicle industry,” Commerce Secretary Gary Locke said on Thursday.

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