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Retail Sales Rise in July

Consumers heading into the back-to-school season stepped up their purchases of apparel and accessories.

WASHINGTON — Consumers heading into the back-to-school season stepped up their purchases of apparel and accessories in July as specialty stores, department stores and discounters all posted gains, according to the monthly retail sales report released by the Commerce Department on Tuesday.

This story first appeared in the August 14, 2013 issue of WWD.  Subscribe Today.

Sales at apparel and accessories stores rose a seasonally adjusted 0.9 percent last month to $21 billion, while sales at general merchandise stores, a category that includes discounters and department stores, increased 0.4 percent to $55.1 billion in July. Department stores posted a 0.6 percent rise in sales to $14.5 billion.

On a year-over-year basis, specialty-store sales were 4.2 percent higher than in July 2012, while sales at general merchandise stores were up 1.1 percent. Department stores showed the only sign of weakness compared with a year earlier, posting a decline of 4.8 percent in sales.

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In the overall economy, retail sales edged up 0.2 percent to $424.4 billion, with broad-based gains in apparel specialty stores, food and beverage and gas stations driving top-line growth. Core retail sales, excluding volatile auto, auto parts and gasoline, rose 0.5 percent in July.

“The gains in clothing, sporting, department, general merchandise and restaurants in July after a poor showing in June are pointing to renewed strength on the back-to-school shopping season and consumer spending for the third quarter,” said Chris G. Christopher Jr., director of consumer economics at IHS Global Insight. “In addition, both grocery stores and restaurants posted significant gains. The poor showing of autos in July is not that Americans are shying away from car purchases — it is more indicative of a very strong June showing with some payback in July.”

Christopher said consumers made a “comeback in July,” noting that discretionary and nondiscretionary spending did well.

“Our third-quarter consumer spending and retail sales outlook is looking slightly better after this report, and consumer confidence remains relatively elevated,” he said. IHS changed its third-quarter consumer spending growth forecast from 1.7 percent to 1.9 percent.

Scott Hoyt, director of consumer economics at Moody’s Analytics, said the sales growth was modest and in line with economists’ expectations.

“Consumers are continuing to grow their spending at a modest pace, which, given weak income growth, is fairly impressive, although we would like to see something better on the spending side,” Hoyt said.

Hoyt said he expects b-t-s sales growth to continue at a modest pace, noting that general merchandise stores and department stores in particular have been underperforming for the past year.

“While it was a good month, from a longer-run perspective, those segments are underperforming right now,” Hoyt said.

The National Retail Federation called the report a “mixed bag” for retailers in July, noting that sales gains in b-t-s categories such as clothing and sporting goods were offset by what the association said were “surprising declines” in building materials and furniture stores.

“While clothing and sporting goods retailers saw modest gains with early back-to-school shopping, home-based retailers saw marked decreases, possibly indicating the end of the yearlong housing boom,” said Jack Kleinhenz, chief economist at the NRF. “Spending has stalled and the economy is stuck in neutral. Even with modest employment gains and steady consumer confidence, Americans remain in a cautiously positive spending pattern.”