U.S. July Retail Sales Slow, Threatening Back-to-School Season

U.S. retailers' sales in July rose at the slowest pace in 4 months as higher fuel and food costs discouraged consumers from visiting malls. Retailers' comparable-store sales grew 2.6%, the smallest gain since March, according to the International Council of Shopping Centers. That set the stage for what may be the slowest back-to-school season in 7 years, and might threaten year-end holiday sales, biggest source of revenue for U.S. retailers. ICSC’s chief economist said the recent report doesn't paint a great start for the back-to-school season. Consumers aren't buying apparel for back-to-school, he said. All but 5 of the 29 companies in the S&P's 500 Retail Index fell. The index declined 1.1% to 363.48. Comparable-store sales are considered by some investors to be the best measure of results because they exclude impact of openings and closings in the past year. Analysts on average estimated a 3.3% rise, according to Retail Metrics LLC. Consumers purchased groceries, flat-panel TVs and video games, while apparel and home goods were "slightly negative," the company said.

Slow Back-to-School

Back-to-school purchases from July through September, retailing's second biggest season after Christmas, this year may climb 1% to $38.5B, according to the ICSC. That would be the slowest growth since 2001, the group said. Teen retailers start setting out their back-to-school lines in July, said a retail analyst at RBC Capital Markets in NY. August and September are more important back-to-school shopping months than July, he said recently. Consumer inflation in June rose 0.8%, the most since Sept. 2005, the Commerce Department said. Last month, the U.S. unemployment rate rose to 5.7%, the highest in over 4 years, the Labor Dept. said Aug. 1. July consumer confidence stayed near the lowest level since 1992, according to Conference Board data released recently.