June sales fell for most U.S. retailers as the plunging job market and cool, rainy weather dampened interest in summer shopping for consumers, triggering concern about the back-to-school season.
But some retailers stuck to their forecasts, or even raised their outlooks after spending months trimming inventories and cutting costs.
This helped support some stocks. The Standard & Poor's Retailing Index <.RLX> was up 0.3 percent on Thursday morning, roughly in line with the broader S&P 500 <.SPX>.
Sales at stores open at least one year fell 4.9 percent overall, Thomson Reuters data showed. More than half of the retailers polled missed expectations, with teen apparel chains and department stores posting the steepest declines.
Among clothiers, Gap Inc , Limited Brands Inc , American Eagle Outfitters Inc and Abercrombie & Fitch all reported double-digit drops.
Department stores followed suit. Macy's Inc reported a same-store sales decline of 8.9 percent, while higher-end chain Nordstrom Inc posted a 10 percent drop.
We continue to have an exceptionally stressed consumer, said Craig Johnson, president of retail research firm Customer Growth Partners. Almost across the board, there's evidence the green shoots are few if any among a very brown field.
The long recession, growing job losses and tight access to credit have forced shoppers to seek deep discounts and buy only essential items like groceries and toiletries.
Discounter Target Corp posted a 6.2 percent drop in same-store sales, compared with the 5.6 percent decline analysts expected. Demand was strong for food and health care items, but remained weak for clothes and home goods, the company said.
But Target also said quarterly earnings would meet or exceed Wall Street expectations, and its shares rose more than 4 percent.
Costco Wholesale Corp posted a 6 percent drop in June same-store sales, in line with Wall Street estimates. It cited tepid demand for such items as cameras and air conditioners and more interest in foods.
Rival BJ's Wholesale Club Inc reported a 7.5 percent decline in same-store sales, slightly lower than expected.
Monthly retail sales reports have been barometer of the overall economy. But Wal-Mart Stores Inc's decision in May to stop disclosing this data has made it tougher to judge the industry's overall performance each month, analysts have said.
June usually marks the onset of summer weather, when consumers seek out items like light clothing, beachwear and barbecue equipment.
But this past June was the second-coolest in 10 years, with record rainfall in cities like New York, Boston and Chicago, weather research firm Planalytics said.
Adding to the pressure, the boost retailers got last year from consumers spending their tax rebate checks was absent this year.
Gap posted a 10 percent drop in same-store sales, and its shares fell 1.2 percent.
Victoria's Secret parent Limited reported a steeper-than-expected decline of 12 percent, sending its shares down 7.1 percent. Same-store sales fell 32 percent at Abercrombie and 11 percent at American Eagle.
But some retailers offered hope.
Both J.C. Penney Co Inc and Ross Stores raised their quarterly earnings outlooks. While same-store sales fell 8.2 percent at Penney [ID:nWNAB5708], they were up 1 percent at Ross , whose shares hit a 52-week high.
For retailers, the spotlight is now on back-to-school sales, which analysts consider to be a critical measure of consumers' ability to spend ahead of the holiday season.
Fashion retailer Wet Seal Inc , which posted an 11.1 percent same-store sales drop, said it would take a conservative stand with inventory ahead of the back-to-school period.
Zumiez Inc , which sells snowboarding gear, said it expected July and August sales to suffer because of a delayed start to the season, a trend that department store operator Penney also noted.
The situation could worsen for retailers, as gas prices inch up and job losses continue, said Retail Metrics President Ken Perkins.
It could be a very difficult back-to-school shopping season, Perkins said. If that's the case, it's going to be a negative harbinger for what we see for the holidays.
(Additional reporting by Jessica Wohl and Ben Klayman in Chicago, Alexandria Sage in San Francisco and Vidya Lakshmi in Bangalore; Editing by Lisa Von Ahn)