Retailers post mixed June sales results

NEW YORK — Shoppers, enticed by heavy discounts and armed with rebate checks, spent more freely in June, helping to lift many retailers' sales. The outlook for the back-to-school season remains tough, though, as consumers confront high gas and food prices, a slumping housing and tighter credit.

As the nation's retailers reported June sales on Thursday, discounters and wholesale club operators including Wal-Mart Stores Inc., BJ's Wholesale Club Inc. and Costco Wholesale Corp. reported better-than-expected figures as consumers limited purchases mainly to groceries and other necessities.

The reports showed that some rebate money made their way to apparel stores, like Children's Place Retail Stores Inc., though sales generally remained sluggish at mall-based apparel stores, including Limited Brands Inc., Gap Inc., and Wet Seal Inc.

"The rebate checks have kicked in this month, and that is trickling into some discretionary areas," said Ken Perkins, president of RetailMetrics LLC, a research company in Swampscott, Mass. But he added that the rebate checks only provide a "one-time bump."

"The back-to-school season is going to be challenging," he said.

June, the second most important month in a retailer's sales calendar, is a time when merchants clear out summer goods to make room for back-to-school merchandise, and clearly, customers were finding some good deals.

Barneys New York is offering up to 75 percent off on designer merchandise, while Banana Republic has discounts of up to 60 percent.

Perkins said the discounts have generally been planned well in advance and stores have been prudent about keeping lean inventory, so the second-quarter earnings results shouldn't be a disaster.

But the picture is definitely weaker. Perkins estimated that second-quarter profits for the 130 companies he tracks are expected to be down 5.6 percent, compared to the 6 percent increase expected at the beginning of the year.

Merchants appear to be more aggressive about discounts than last year, as they aim to pull in consumers who find their paychecks aren't keeping up with rising food and gas prices. Consumers are also struggling with tightening credit, the ongoing housing slump and a weakening job market. Such fears have dragged down consumers' outlook for the economy to the lowest level in at least 40 years, according to the Conference Board.

"People are being way more picky" about clothing purchases, said analyst Jennifer Black.