NEW YORK — Shoppers, worried about jobs and the overall economy, pulled back on spending in June, resulting in tepid sales results for many retailers.
The reports raise concerns about Americans' ability to spend during the back-to-school shopping season, which starts later this month.
As merchants reported their sales early Thursday, many of them disappointed. Costco Wholesale Corp. reported a gain below Wall Street expectations. Target Corp. and Macy's Inc. also missed estimates. One bright spot was Limited Brands, which reported a robust gain that surpassed Wall Street predictions.
"These are disappointing results," said Ken Perkins, president of RetailMetrics, a research firm. "The consumer is slowing down and becoming increasingly more cautious as the economic backdrop is deteriorating. This doesn't set up particularly well for back-to-school."
June is a period when stores clear out summer merchandise to make room for fall goods, but it took more discounts than a year ago to get shoppers to buy because of a weakening economy, according to UBS Investment Research analyst Roxanne Meyer.
Only a handful of chains representing roughly 13 percent of the U.S. retail industry report monthly sales. Those figures are based on stores open at least a year and are a key measure of retailers' health because they exclude newly opened and closed stores. Economists watch the numbers because they offer a snapshot of economic activity.
Other areas show a struggling global economy. U.S. manufacturing shrank in June for the first time in nearly three years, and employers have pulled back on hiring. Europe faces a recession and growth has slowed in big countries like China. Worries about jobs sent shoppers' confidence down in June for the fourth straight month in a row.
Some positives have emerged. Gas prices are down 60 cents since their peak of $3.94 in April, and data show that home prices have begun to stabilize in most U.S. markets. But in order for shoppers to get more comfortable spending, hiring needs to improve dramatically.
Economists expect U.S. employers to add 90,000 jobs to payrolls when June figures are reported Friday. That would be up from 69,000 in May. But that still wouldn't be enough to lower an unemployment rate stuck at 8.2 percent.
In fact, a majority of economists in the latest Associated Press Economy Survey expect the national unemployment rate to remain above 6 percent — the upper limits of what's considered healthy — for least four more years.
Other factors made June's retail results look tepid. The figures were being compared with hefty sales gains a year earlier, when results were the most robust for that month since 1999. The late arrival of warm weather had helped a buying binge of shorts and other summer clothing.
And in another sign that shoppers were more worried about money this June, discounters fared better than clothing merchants.
Costco's revenue from stores open at least a year rose 3 percent but fell short of Wall Street's expectations. Analysts polled by Thomson Reuters expected, on average, a rise of 3.7 percent from the Issaquah, Wash., wholesale club operator.
Target's revenue in stores open at least one year rose 2.1 percent as shoppers spent more on food and health and beauty items. That was slightly lower than the 2.4 percent rise analysts expected.
Macy's reported a slimmer 1.2 percent gain, below the 1.9 percent increase that analysts had projected.
"June sales were below expectations," said Terry Lundgren, chairman, CEO and president of Macy's. "In part, this was a function of a macroeconomic environment that is stagnant at best, and lower spending by tourists in cities such as New York."
He also cited the renovation of Macy's Herald Square store in Manhattan, which is creating more short-term disruption in business than expected.
Among teen retailers, The Wet Seal Inc. said that revenue in stores open at least one year fell 9 percent, a bigger drop than analysts expected. Analysts polled by Thomson Reuters expected a 7.7 percent drop.
Not everyone saw tepid results.
Limited Brands, which sells affordable luxuries, enjoyed a 7 percent gain in June, more than double what Wall Street expected from the Columbus, Ohio company. Limited Brands operates Victoria's Secret and Bath & Body Works stores in North America.
Luxury chains Nordstrom Inc. and Saks Inc., which operates Saks Fifth Avenue, also fared well, showing that the wealthy continue to spend. Nordstrom notched an 8.1 percent increase, and Saks had a 6 percent gain. Analysts had expected a 4.7 percent increase for both retailers.