RetailSails

U.S. Chain Store Sales were fairly soft this past week, with both ICSC and Redbook reporting declines in year-over-year figures this morning:

• The International Council of Shopping Centers (ICSC) reported that comparable same-store sales decreased 0.6% in the 2nd week of August vs. a year ago, while same-store sales fell 0.9% on a week-over week-basis. “Consumers remained cautious with their spending,” said Michael P. Niemira, ICSC chief economist. “Even with the recent bout of summer weather, which may have been helpful to clear summer merchandise, those items were heavily marked down and really did not help reported sales. Overall sales for August continue to face headwinds and with that ICSC Research continues to expect the month’s performance will be down between 3.5 to 4 percent,” Niemira added.
• Redbook Research reported that retail same-store sales for the week ending Aug 15th declined 4.5% compared to the year-ago period, while sales for the first two weeks of July were down 0.7% from the same period last month, and 4.4% lower than last year. The firm added that back-to-school demand continues to be spotty, though the end of state tax-free holidays fell in the period, helping drive traffic and sales. Note that Wal-Mart stopped reporting weekly and monthly sales figures in May of this year, and the substantial impact they had on the index is evident in the graph below.

About halfway through the back-to-school season, consumers remain extremely cautious, and many analysts predict the worst shopping season in a decade. Several retailers have reported 2nd quarter results, and this week will bring a flurry of retail earnings reports. The majority of companies have beat estimates through cost-cutting and inventory management measures. However, top-line results have continued to disappoint, and based on comments from executives on earnings conference calls, we don’t expect to see much improvement in the 3rd quarter.