U.S. apparel stores hit by July doldrums - report
NEW YORK, Aug 8 (Reuters) - U.S. clothing and shoe retailers suffered summer doldrums in July, as some consumers' desire for fashion cues and tax breaks led them to delay their back-to-school shopping, according to data released on Wednesday by SpendingPulse.
Still, the luxury sector continued to shine, showing that high-end shoppers did not hold back.
SpendingPulse, the retail data service of MasterCard Advisors, bases its data on sales activity in the MasterCard payments network plus estimates for all other payment forms.
The figures offer an early indication of the strength of July sales results, which chains such as Wal-Mart Stores Inc. (WMT.N), J.C. Penney Co. Inc. (JCP.N) and Gap Inc. (GPS.N) will report on Wednesday afternoon and Thursday morning.
Analysts and investors watch closely for signs of a slowdown in consumer spending, which accounts for roughly two-thirds of national economic activity.
SpendingPulse said clothing sales rose 1.7 percent in July, their most sluggish growth since April. Footwear, whose monthly sales were flat with a year earlier, had its lowest growth rate since July 2003.
"We think the back-to-school season might be shifting a little later over the last couple of years, especially in apparel," Michael McNamara, SpendingPulse's vice president of research and analysis, said in an interview.
"Perhaps people are buying some of their staple goods a little bit earlier but they're not really buying the more fashionable items until they actually see what all the other kids are wearing," McNamara said.
Although McNamara declined to comment on specific companies, his observation implies that general merchandisers such as Wal-Mart and Target Corp. (TGT.N) could post decent gains in July, while fashion-driven apparel companies like Abercrombie & Fitch Co. (ANF.N) and American Eagle Outfitters Inc. (AEO.N) could get their boosts in August or September.
"At the end of July you usually see somewhat of an uptick in volumes, but this year the numbers didn't really show that ... at least not in the specialty category," McNamara said.
Women's clothing sales rose 0.5 percent in July, compared with a 3.6 percent gain in June, while men's apparel rose 3.8 percent in July, also down from its June rate. Both categories experienced their slowest growth since April.
Most surprisingly, McNamara said, was the pullback in spending on footwear. But he cautioned that it was too early to call it a trend shift, noting that it could just be a reaction to a tough year-ago comparison and strong gains in June.
"We'll have to wait and see," McNamara said. "Overall retail sales are still growing, but at at decelerated pace. I wouldn't say we're heading into the month of August with a lot of momentum."
Besides waiting to see what others are wearing before making their purchases, McNamara said some people could be putting off their purchases to coincide with special days when many states forego their sales taxes.
"In many states I think people might be getting more trained to time their shopping around tax holidays, and most of those occur in August and September," McNamara said. Continued...
