Chain store sales finished off the month on a positive note, as hot weather and promotions drove strong business in summer clearance items.
We will get a better idea of how retailers fared in July when nearly 30 major chains report monthly performance this week. Stay tuned, as tomorrow we will release our comprehensive back-to-school spending report and Thursday morning we will have full coverage of July same-store sales results, which are expected to show a 4.1% increase on top of a 2.8% gain last year.
While this would represent the 23rd consecutive monthly gain, there are worrying signs that rising prices, stagnant wages and unemployment, and recent government austerity measures are beginning to take their toll on household budgets.
This morning, the Commerce Dept. reported that Americans cut their spending in June (-0.2%) for the first time in nearly two years after seeing their incomes grow by the smallest amount (+0.1%) in nine months. In addition, the personal savings rate rose to 5.4% of after-tax incomes, the highest level since August 2010.
There has been a large divergence between low and middle-income consumers, who still feel mired in a recession based on most consumer confidence measures, and the affluent who have seen their wealth surpass pre-recession levels and have benefited the most from rising asset prices.
Luxury retailers have been among the best performers since the end of the recession, and they will have a much easier time raising prices to combat rising costs than their lower-priced peers. As evidence, upscale handbag maker Coach reported earnings this morning that beat analyst estimates as total sales for its fiscal year rose 15.3%. Analysts were disappointed as gross margins fell for the second consecutive quarter, but at 71.8% are still the highest in the industry. Continue reading ‘Retail News & Notes’
