NEW YORK — With the benefits of their stimulus checks dried up, Americans are focusing even more on necessities such as detergent and milk. That’s creating big problems for apparel chains at the malls as the important back-to- school shopping season gets underway.
Even more ominous: The number of newly laid-off people unexpectedly hit the highest level in more than six years, according to a government report released Thursday.
“Most kids will be returning to school in last year’s duds,” Lazard Capital Markets analyst Todd Slater wrote in a report after seeing the July results from apparel retailers.
Sales reports for July from the nation’s retailers show a widening gap between low-price operators and fashion chains, and analysts say the next couple of months will be critical for clothing stores that are on the cusp.
But discounters such as Wal-Mart Stores Inc. will have their challenges as well.
The world’s largest retailer, whose July sales results were slightly below Wall Street estimates, said it’s seeing customers increasingly unable to stretch their dollars to the next payday. It also predicted that August’s sales pace would be slower than July.
