By  on August 13, 2008

WASHINGTON — Sales at specialty stores increased 0.2 percent in July from the previous month, while department store volume grew 0.1 percent, the Commerce Department reported Wednesday.

Compared with July 2007, specialty store sales advanced 0.9 percent to $19.13 billion, but those at department stores fell 2.1 percent to $17.2 billion.

Sales for all retail and food service providers dipped 0.1 percent in July compared with the previous month, the worst results since February. The Commerce Department said total retail sales in July were 2.6 percent higher than a year earlier. Analysts said results were largely in line with expectations. June sales were revised upward to a 0.3 percent increase from initial reports of a 0.1 percent gain.

Results were weak when individual retailers reported their same-store sales last Thursday, with many missing expectations or reporting declining numbers.

July continued to benefit from the residual effects of the last round of federal economic stimulus checks, but the effect is starting to slow down and probably won’t help results moving forward, economists said.

“The consumer is running out of steam,” said Nigel Gault, chief U.S. economist at Global Insight. “There is some boost to the level of spending still in place from the stimulus checks, which probably helped to offset the drag from the very high gasoline prices in July.”

Looking ahead to August, gas prices have come down a little, but the stimulus checks ended, which could mean lackluster back-to-school spending. Wal-Mart Stores Inc. gave soft guidance for the month, despite doing better than many other retailers recently, which could bode ill for the overall outlook, Gault said.

Retailers did their best to protect margins as they faced a difficult consumer market combined with rising costs in the last several months, said Charles McMillion, president and chief economist at MBG Information Services.

Transportation and energy costs in particular have risen, and employee compensation costs have also increased, he said.

“For apparel, it’s been really tight,” he said. “If we’re not in a recession we’re very close, and that’s never a good time for retail.”

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