The start of back-to-school season failed to entice consumers in July, providing another dismal report card for the underachieving retail industry.
The continued weakness -- a result of consumer anxiety about job security and falling home values -- could signal trouble for the all-important holiday season. And with consumer spending accounting for about two-thirds of U.S. economic activity, it also raises doubts that the economy is poised for a rebound any time soon.
"The consumer is still under pressure and things were really sluggish again," said Ken Perkins, president of research company Retail Metrics Inc. "It was just too much for the retailers to overcome."
Total retail sales fell 5.1%, according to Thomson Reuters' survey of 30 major chain stores. That was worse than the negative 4.6% average for the year through July and marked the second-weakest month for retail sales in 2009, the information company said.
There were significant double-digit sales declines at such popular chains as teen retailer Abercrombie & Fitch Co., which posted a 28% decrease; luxury chain Saks Inc., down 16.3%; and American Apparel Inc., the Los Angeles chain known for its colorful basics and racy ads, with a 13% drop.
At South Coast Plaza in Costa Mesa this week, Diane Bushly left empty-handed except for a dessert she bought for $3. These days, the auditor instructor from Denver said, "we're lookers, not shoppers."
"I look at it and say, 'Do I really need it?' " she said of her recent shopping habits. "If I don't, then I don't buy it."
Sales last month were hampered by lean inventories, colder-than-usual weather in some regions of the country and a shift of sales-tax holidays from July to August in most of the dozen or so states that have them.
Perkins also suspected that consumers who bought new cars through the government's "cash for clunkers" program could be shutting their wallets to other discretionary purchases.
"An additional $300, $400 in car payments a month is going to come out of somewhere," he said. "My guess is that'll siphon some money away from traditional mall-based retailers."
The retail picture seemed particularly weak on the West Coast, said Betty Chen, an analyst at Wedbush Morgan Securities in San Francisco.
Several retailers "did call out the West as one of the slower regions for them," she said. "Because of the housing market and unemployment, we're trending above the national average, so that continued to hurt many companies because spending continues to be down."
