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NEW YORK -- Colossal discounts enticed consumers to shop like it was 1999 last month. But higher prices could cause the party to end soon.
Warm weather and discounts of up to 80 percent on summer merchandise helped retailers deliver the best revenue gains for the month since June, 1999. But pressure on stores to pass along higher costs for everything from clothing to food has raised concerns that the momentum may not hold heading into the busy back-to-school shopping season.
Overall, revenue at major retailers rose 6.9 percent for June, according to the International Council of Shopping Centers' tally of 28 retailers.
"Promotions were the clear driver this month, and consumers took advantage of some outstanding deals," said Ken Perkins, president of research firm RetailMetrics LLC. "But that leaves a big question mark for July and the back-to-school season. Will shoppers be willing to spend full price?"
Brian Sozzi, of Wall Street Strategies, said many consumers, particularly at the lower-income levels, feel that their jobs aren't guaranteed and wait for deep discounts. He said June's results are indicative of the "roller coaster" sales trend prevalent this year.
"There continues to be more mixed reads on the state of the U.S. consumer than there are alcohols in a Long Island Iced Tea," Ms. Sozzi said. "The spending recovery is far from consistent."
Discounter Target Corp. and wholesale club chain Costco Wholesale Corp. were among the companies that posted June results that beat Wall Street estimates.
Luxury retailers such as Nordstrom Inc., Neiman Marcus, and Saks Inc. also posted another month of stellar gains.
At the same time, J.C. Penney, which targets the middle income shopper, registered a sales gain that came in below analysts' projections and released a disappointing profit outlook. And Bon-Ton Stores Inc., which owns Elder-Beerman stores, announced a decline.