July retail sales data show stimulus fading

Still, as major retailers such as Wal-Mart report their earnings starting next week, the results are expected to show that customers are finding that their paychecks are not keeping up with rising food and gas prices. Shopppers are also dealing with tighter credit, a housing slump that doesn’t look like it will be ending anytime soon and a weaker job market. Such fears have dragged down consumers’ outlook for the economy to the lowest level in decades, according to the Conference Board.

Thursday’s report on unemployment underscored the woes in the job market. The Labor Department reported that the number of newly laid-off people signing up for benefits rose by a seasonally adjusted 7,000 to 455,000 for the week ending Aug. 2 — putting claims at their highest level since late March 2002.

Facing these increasing financial worries, Americans have been shopping at lower-price alternatives — which has helped stores like Wal-Mart and Costco. But Thursday’s sales reports show that even discounters, which had been the biggest beneficiaries of the stimulus checks in recent months, are facing tougher times.

Wal-Mart reported a 3 percent gain in same-store sales for July, missing the 3.4 percent gain expected by analysts polled by Thomson Financial. The results excluded gasoline sales. Including gasoline results, same-store sales would have been up 3.7 percent.

The discounter said that same-store sales increased in grocery, entertainment, and health and wellness, but that its home and apparel business posted small declines. Wal-Mart noted that it saw sales momentum building in back-to-school offerings across the store and expects the momentum to carry through the August period.

Still, the company forecast only a modest same-store sales gain of 1 percent to 2 percent for August.

“With the end of the stimulus checks, we know consumers are spending more cautiously, and we continue to see a pronounced paycheck cycle at the end of the month,” Eduardo Castro-Wright, president of Wal-Mart’s U.S division, said in a statement.

Chief rival Target Corp., which has been stumbling in recent months, said that same-store sales slipped 1.2 percent, worse than the 0.3 percent decline that Wall Street expected. The discounter has a higher percentage of nonessentials like clothing and home furnishings compared to Wal-Mart.

But wholesale club operators keep turning in results that beat Wall Street estimates. Perkins noted that they benefited because they are a one-stop shop — consumers are increasingly filling up their cars with cheaper gas at those places and then heading into the stores for groceries and other items.

Mall-based apparel stores and department stores foundered as shoppers appear to be buying only what they need. Luxury stores reported weak results too, as the affluent appear to be further cutting back on status handbags and designer clothing.

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