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Retailers report best sales growth since March

NEW YORK — This summer, Americans were walking contradictions: They opened their wallets despite escalating fears about the slow economic recovery and surging gas prices.

A group of 18 retailers ranging from discounter Target to department store chain Macy's reported August sales on Thursday that rose 6 percent — the industry's best performance since March — according to the International Council of Shopping Centers, a trade group.

The news appears to show that what Americans say and do are two different things: The report 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.

"This is bit of a head scratcher," said Mark Vitner, a Wells Fargo Securities senior economist. "This runs counter to most of the other data related to the consumer."

The revenue gains in August, which factor in only stores that were open at least a year, are better than the 4 percent to 5 percent increase Wall Street predicted at the start 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 4 percent to nearly 7 percent growth since the start of the year. But analysts worry that Americans are shopping now only because they are buying necessities for their children for back-to-school, and that the healthy spending won't last.

"It's certainly strong on the surface. But is it a sign of an improving economy and retailing environment? Or is it just more of the same: Shoppers were driven by need?" said Michael P. Niemira, chief economist at the International Council of Shopping Centers.

Stores certainly benefited from people shopping for supplies and clothes for back-to-school, the second-biggest shopping period of the year. Many department and clothing stores like Macy's and the Gap had better-than-expected results as trendy fashions like brightly colored jeans caught shoppers' attention.

The Gap, which filled its stores with fashions in hot pinks, coral blues and aqua greens, posted a 9 percent gain, as back-to-school shoppers headed into its chains, particularly Old Navy. The results beat analysts' expectations of a 5.4 percent rise.

Target also reported better-than-expected results. It had a 4.2 percent gain in August, better than the 3.1 percent increase that Wall Street expected. Business was strongest in food, and health and beauty items, but shoppers also bought clothing and home furnishings, the discounter said.

Macy's 5.1 percent gain also was better than the 3.6 percent forecast. The company said its men's apparel, home furnishings, beauty products, women's shoes and handbags continue to perform well.

The strong sales reports give retailers some reason to be optimistic as they look toward the busy winter holiday shopping season, the busiest period of the year, in November and December.

Other economic news

• Consumer spending rose 0.4 percent in July from June, the Commerce Department said Thursday. That followed no change in June and a slight decline in May. Incomes grew 0.3 percent, matching the gains from May and June. The savings rate after taxes dipped to 4.2 percent in July from 4.3 percent in June, which was the highest rate in a year.

• The number of Americans seeking unemployment benefits was unchanged last week at a seasonally adjusted 374,000, suggesting slow improvement in the job market. The Labor Department said Thursday that the four-week moving average, a less volatile measure, increased to 370,250. When applications fall consistently below 375,000, it generally indicates that hiring is strong enough to lower the unemployment rate.

Retailers report best sales growth since March 08/30/12 [Last modified: Thursday, August 30, 2012 8:17pm]
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