Americans' cautious spending on clothing extended into August, capping a weak back-to-school selling season for retailers.
Americans’ cautious spending on clothing extended into August, capping a weak back-to-school selling season for retailers.
Several retailers including clothiers Cato Corp. and L Brands Inc. on Thursday posted disappointing revenue during the month, which falls in the middle of the second biggest shopping period of the year.
The results raise questions about whether Americans will spend during the winter holidays in November and December, a time retailers can make up to 40 percent of their revenue for the year. While the back-to-school season, which runs from mid-July through mid-September, isn’t an absolute predictor of how Americans will spend during the winter holidays, it does offer insight into consumers’ mindset.
“Overall, the month was mediocre for sales,” said Michael P. Niemira, chief economist at the International Council of Shopping Centers. “The back-to-school season started late and it never had momentum.”
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Overall, revenue at stores opened at least a year – a measure of a retailer’s health- rose 3.6 percent in August, according to a tally of 10 retailers by the International Council of Shopping Centers. That’s up a tad from July’s 3.5 percent gain, but below the 6 percent gain in August last year.
Only a sliver of retail chains report monthly sales figures, and the list doesn’t include Wal-Mart Stores Inc., Macy’s Inc. and many other large chains. In total, the retailers that report monthly data represent about 6 percent of the $2.4 trillion in U.S. retail industry sales.
But Thursday’s tally adds to evidence that while jobs are easier to get and the turnaround in the housing market is gaining momentum, the improvements have not been enough to sustain higher levels of spending for most Americans. Most still are juggling tepid wage gains with higher costs of living.
As a result, Americans in recent months have been shifting their spending to big ticket items like cars and home improvement, which has left little room for clothing and impulse purchases. Indeed, last month, a number of retailers including Macy’s Inc., Target Corp. and Wal-Mart, lowered their expectations for the rest of the year, citing a more challenging environment than they had expected.
Many stores stepped up discounting in August to get shoppers to buy. Teen retailer Aeoropostale Inc. offered 50 percent discounts on its entire merchandise over Labor Day weekend. Ann Inc.’s low-priced Loft cut prices by 50 percent on select full-price items and added another 50 percent off on sale items.
Gap Inc., which operates stores under its namesake, Old Navy and Banana Republic, announced late Thursday that its revenue at stores opened at least a year rose 2 percent. Analysts had expected a 2.2 percent gain.
Conversely, automotive retailer AutoNation Inc. on Thursday issued a report that new vehicle sales climbed 32 percent in August, led by strong sales of premium luxury vehicles. The report from AutoNation followed robust August sales from companies in the auto industry, which had its best month in six years.
Roxanne Meyer, an analyst at UBS, wrote the “overall retail environment remains choppy” in a note published earlier this week.