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Retail sales keep falling as stores brace for worse

NEW YORK — Shoppers remained tight-fisted in July, raising concern about the back-to-school and holiday shopping seasons, as well as for the broader economic recovery.

The big worry is that frugal parents will focus on outfitting their children this fall with just necessities like notebooks and jeans. And fear is bubbling up that parents might consider any extra splurges early Christmas gifts.

A monthly compilation of more than 50 retailers' results by the International Council of Shopping Centers and Goldman Sachs showed overall same-store sales fell 5 percent in July compared with the year-ago period.

Same-store sales are sales at stores open at least a year and are considered a key indicator of a retailer's health.

Bargain hunting played out again in the retailers' reports, with mall-based apparel stores faring the worst. Among the disappointments were Macy's Inc. and teen retailers Abercrombie & Fitch Co. and Wet Seal Inc.

The few bright spots were apparel discounters like Ross Stores Inc. and TJX Cos., operator of the T.J. Maxx and Marshalls chains, both of which reported sales gains.

July's decline marks the 11th consecutive monthly drop when excluding Wal-Mart results — which had buoyed the industry in the spring before it stopped reporting monthly numbers.

Even among the discounters, shoppers still remain frugal when buying nonessentials, though there may be signs of easing.

Warehouse club operator Costco Wholesale Inc. reported Thursday that its same-store sales dropped 7 percent in July, pressured by lower gas prices and the stronger dollar. The retailer said some of its strongest categories were food, including deli, candy and frozen food.

Target Corp., which has been stumbling because of its reliance on nonessentials like trendy jeans, posted a worse-than-expected 6.5 percent drop.

Among department stores, Macy's reported a deeper-than-expected 10.7 percent drop in same-store sales. But luxury retailer Nordstrom Inc.'s decline wasn't as steep as anticipated, suggesting that the stock market rally may be boosting affluent shoppers' confidence.

New jobless claims fall; overall claims rise

With the U.S. unemployment rate set to be released today, the number of newly laid-off workers seeking unemployment benefits fell last week to 550,000, down from 588,000 the previous week. The 550,000 figure was much lower than analysts' estimates of 580,000, according to Thomson Reuters. Still, the number of people continuing to claim benefits rose by 69,000 to 6.3 million, after having dropped for three straight weeks — evidence that job openings remain scarce and the unemployed are having difficulty finding new work.

Retail sales keep falling as stores brace for worse 08/06/09 [Last modified: Thursday, August 6, 2009 9:44pm]
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