WASHINGTON — Sales at department stores and general merchandisers fell in July, as overall retail sales flattened in the month, the U.S. Department of Commerce’s monthly report showed Wednesday.
Department store sales dipped a seasonally adjusted 0.7 percent to $13.8 billion last month, while sales at general merchandise stores, a category that includes department stores, fell 0.5 percent to $55.1 billion. Apparel and accessories stores posted a 0.4 percent sales gain to $21.2 billion last month.
Economists attributed the anemic sales to weak income and wage growth.
“While it was a relatively good month for clothing and accessories stores, I don’t think the broader picture looks all that good,” Scott Hoyt, senior director of consumer economics at Moody’s Analytics. “Clearly, the lack of income growth is still a constraint and wage growth is very weak despite the gains we have seen in jobs....We are just not seeing much in the way of consistent spending growth right now.”
Hoyt said there is a slowdown in the pace of year-over-year sales growth for department stores, specialty stores and general merchandisers. Sales at department stores were down 3 percent in July compared with a year earlier, while sales at specialty stores rose 1.6 percent and sales at general merchandisers advanced 1.1 percent on a year-over-year basis.
“Retailers right now are witnessing a choppy pattern of spending, choosing between large-ticket items and other discretionary purchases, with services they may need,” said Jack Kleinhenz, chief economist at the National Retail Federation. “Families today are still displaying behavior that shows they continue to struggle with purchase decisions, based on needs versus wants. It is also evident some consumers are cautious about leveraging up credit to support purchases.”
In the overall economy, retail sales were unchanged in July at $439.8 billion, falling below economists’ expectations.
Chris G. Christopher Jr., director of consumer economics at IHS Global Insight, said sales gains at clothing and accessories stores, health and personal care, and food and beverage stores were not strong enough to offset losses at general merchandise, autos and parts dealers, furniture and home furnishings and electronic stores.
“Recent news on jobs [gains in] the economy and consumer confidence has been favorable, but consumers are still relatively cautious,” Christopher said. “American consumers continue to face considerable headwinds such as elevated poverty levels, depressed median household disposable income adjusted for inflation, anemic wage growth, higher food prices and high levels of student-loan debt.”
Despite the lackluster sales in July, Christopher remained bullish about the back-to-school season, while Hoyt was less sanguine.
Christopher said the season this year is expected to be “slightly weaker than last year,” predicting year-over-year growth of 4 percent compared with year-over-year growth of 5 percent in 2013.
“This back-to-school retail season is looking relatively good, just not as strong as last year,” Christopher said.
Hoyt said: “The trend in sales growth has been downward since it peaked in March, coming out of an awful winter, so that has to be concerning for retailers heading into the back-to-school season.”
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