June retail spending cautious

Consumer spending at large department stores in June was relatively strong, but sales at other store chains in the US remained uncertain, said the Financial Times. According to Retail Metrics, June benefited from a late Memorial Day weekend,

seeing same-store sales at large department stores like Nordstrom and Saks rise 6.1 per cent on the year before.

For department stores in general, however June 2009 saw double-digit sales declines compared with the previous year.

Consumers are still recovering from a shopping “binge” in the first quarter of the year, said Deborah Weinswig, retail analyst at Citigroup. Strong sales in March, which suggested that consumers might be ready for a return to their free-spending ways, turned out to have been a false indicator, she said.

“The feeling is that you had this binge where consumers starved themselves in 2008 and 2009, and they started to spend a little bit more,” she said. “But sales for June are probably going to be a little weaker than anticipated. Now we’re getting questions about a double dip.”

The June results are important, Ms Weinswig said, because for many retailers, June is the middle month of the quarter and its results will determine whether earnings will be strong, or whether they will have to resort to significant discounting to offload inventory in July.

For the most part, luxury purchases have outperformed general retail sales, said Michael McNamara, vice-president of research and analysis for SpendingPulse.

“In June, for the first time in 2010, there was a decline in year-over-year sales in the luxury sector,” he said. “This was the first decline since November 2009. The performance of the luxury sector is closely tied to the performance of the capital markets.”

Image: Nordstrom shopper
Source: Financial Times