The back-to-school shopping season had a disappointing start in July as consumers rattled by a weakening housing market and other financial pressures stayed away from stores and malls.
As merchants reported sluggish monthly sales results Thursday, the weakest performers were mall-based apparel chains, particularly teen merchants like Pacific Sunwear of California Inc. and Wet Seal Inc. Wal-Mart Stores Inc. posted a slim gain but warned that its increased discounting are hurting profit margins.
Among the few standouts were J.C. Penney Co. and Costco Wholesale Corp., both of which beat expectations.
"Overall, July sales were negatively impacted by soft mall traffic," said Ken Perkins, president of RetailMetrics LLC, a research company in Swampscott, Mass. "The consumer is holding up, but certainly feeling the pinch of the housing market and higher gasoline price."
According to Thomas Financial, 15 retailers beat expectations, while 29 missed estimates.
ICSC, meanwhile, reported (pdf., membership req.) July same-store sales grew by 2.6 percent over last year, based on a tally of 48 chains. The performance was consistent with the February through July period's average growth of 2.3 percent.