Retailers report best sales growth since March
NEW YORK — This summer, Americans were walking contradictions: They spent despite their escalating fears about the slow economic recovery and surging gas prices.
A group of 18 retailers ranging from discounter Target to club-operator Costco reported August sales on Thursday that rose 6 percent — the industry’s best performance since March — according to trade group International Council of Shopping Centers. At the same time, the government released numbers showing that Americans spent in July at the fastest clip in five months.
The reports appear to show that what Americans say and do are two different things: The news comes two days after a private research firm said consumer confidence in August fell to its lowest level since November 2011 as Americans grew more concerned about the job market, business conditions and the overall economy.
“It shows some resilience among shoppers. Let’s face it. There are a whole series of economic headwinds that they are fighting against,” said Ken Perkins, president of Retail Metrics, a research firm. “The results show that the consumer isn’t dead.”
A small group of merchants representing roughly 13 percent of the $2.4 trillion U.S. retail industry report monthly revenue at stores open at least a year, a key measure since it excludes results from locations that open and close during the year. Some of the biggest retailers like Wal-Mart and Home Depot do not report monthly sales, but the figures still are closely watched because they offer a snapshot of consumer spending, which accounts for more than 70 percent of economic activity.
August’s results are important because they offer insight into the back-to-school season — the second most important selling period behind the winter holidays — which runs from mid-July through mid-September. Retailers and economists often use the results from back-to-school as a litmus test of how shoppers will behave during the biggest shopping period of the year in November and December.
The gains in August is better than the 4- to 5-percent gain Wall Street predicted at the beginning of the month. And it was the best performance since March, when stores collectively posted a gain of 6.8 percent. Except for a shopping lull in June, stores have seen a healthy pace of anywhere from 4 percent to nearly 7 percent growth since the beginning of the year.
A number of retailers posted strong gains. Costco Wholesale Corp.’s revenue from stores open at least a year climbed 6 percent, beating the 4.5 percent rise analysts surveyed by Thomson Reuters had anticipated. And Target Corp. reported a 4.2 percent increase in revenue at stores opened at least a year. That was better than the 3.1 percent increase that analysts had expected.
The strong sales reports are an encouraging sign for retailers at a time when there are signs that consumers are becoming impatient with the slowly improving economy. The New York-based Conference Board’s Consumer Confidence Index fell to 60.6, down from a revised 65.4 in July.