Retailers posted July sales below analysts' expectations in the latest sign that skittishness about high unemployment and the economy in general are causing consumers to cut spending and focus on essentials.
Some retailers that did manage to eke out gains, including several department stores, did so by taking customers from rivals, rather than from an increase in overall spending.
The 28 retailers tracked by Thomson Reuters reported a 2.9 percent rise in July sales at stores open at least one year, missing Wall Street forecasts of 3.1 percent. Of those, 17 reported lower-than-expected sales, while nine beat estimates.
The Standard & Poor's Retail Index <.RLX> fell 0.4 percent in early trading.
Department store operators Macy's Inc
Macy's reported a 7.3 percent increase in same-store sales, crediting a strong performance by its upscale Bloomingdale's chain and its program that allows stores to choose merchandise to cater to local tastes.
But overall, the U.S. consumer still hesitates to spend money.
We are now in an environment where the dollars in consumers' pockets are fewer, so the competition for those dollars has increased, said Lawrence Creatura, portfolio manager at Federated Clover Investment Advisors.
U.S. consumer sentiment hit its lowest level in nine months in July on bleak prospects for jobs and income, according to Thomson Reuters/University of Michigan's Surveys of Consumers. On Thursday, the government reported that new U.S. claims for unemployment benefits unexpectedly rose in the latest week.
DEPARTMENT STORE DISAPPOINTMENT
Among the retailers that disappointed were JC Penney Co Inc
The weakness extended to other sectors as well. Off-price retailer TJX Cos Inc
July was the 11th straight month of improving sales, compared with a year-earlier drop of 5.1 percent, according to Thomson Reuters data.
But analysts have also noted that year-earlier comparisons will get tougher in the fall and the key holiday selling season.
Teen apparel retailers suffered some of the worst disappointments as a large build-up in inventory led to discounting as shoppers waited to see what back-to-school discounts they can get in August.
Hot Topic Inc
Same-store sales at The Buckle
If one was a teen apparel retailer, the promotions absolutely hurt the comp and second-quarter earnings, Wall Street Strategies analyst Brian Sozzi said in a research note.
Discounters and off-price retailers were expected to show the best gains for July.
Warehouse club operator Costco Wholesale Corp
But other discount chains such as Target Corp
Drugstore chain operator Walgreen Co
(Reporting by Phil Wahba; Additional reporting by Brad Dorfman and Dhanya Skariachan; Editing by Lisa Von Ahn)