The PJ Tatler

Retailers Hit 'Stagnant' Economy in June

Recover Summer? Never heard of it.

July 5 (Reuters) – Stubbornly high unemployment and anxiety about the economy took a toll on top U.S. retailers’ sales in June, raising concerns that shoppers are penny-pinching ahead of the back-to-school season.

Costco Wholesale Corp, Macy’s Inc, Kohl’s Corp and Target Corp all reported disappointing June sales at stores open at least a year.

“In part, this was a function of a macroeconomic environment that is stagnant at best,” Macy’s Chief Executive Terry Lundgren said in statement.

A steady stream of weak economic reports, stubbornly high unemployment and a volatile stock market hurt shoppers’ morale last month, underscored by a tumbling Thomson Reuters/University of Michigan’s consumer sentiment index.

The weak June numbers at many large chains showed how quickly shoppers can decide to put off spending — and could result in discounts during the upcoming back-to-school season, when parents buy clothes and supplies for school-age children.

“June will unnerve retailers,” said Chris Donnelly, global managing director at Accenture’s retail practice.

Adding to the risk, he said, retailers bought fall merchandise in February, when the U.S. economic recovery seemed more solid. If they have too much inventory, they may slash prices, hurting gross margins.

“You’re going to have a tough back-to-school season,” Donnelly said.