NEW YORK — It’s still early, but analysts’ grades already are coming in: The back-to-school shopping season is off to a lousy start.
“Back-to-school selling hasn’t really started yet,” said John Morris, BMO Capital Markets analyst, based on recent conversations he’s had with store executives. “Retailers have a very foggy picture.”
The sluggish start is expected to show up in retailers’ July sales reports, to be released today, as job worries heighten.
By the end of July, sales of items like jeans and other back-to-school merchandise usually have started kicking in. But this year, it won’t be until the third or fourth week of August before stores have a sense of the best sellers because shoppers appear to be delaying their purchases, Morris said, even though back-to-school marketing began in mid-July. That will make it difficult for retailers to reorder popular items.
Craig R. Johnson, president of Customer Growth Partners, a retail consultancy, described the season so far as “late and lousy.”
He added, “Shoppers are still holding back.”
Complicating matters are several one-time factors:
• The shift of the sales-tax holidays from July to August in most of the 14 states that have them because of a late Labor Day weekend has stolen momentum from July.
• Lean — and deeply discounted — inventories are holding down sales as stores aim to protect themselves from getting stuck with piles of leftovers.
• The uptick in car buying spurred by the government’s “cash for clunkers” program might siphon away sales from other categories like clothing and home furnishings, according to Frank Badillo, senior economist at consulting group TNS Retail Forward.
A worrisome sign for merchants — and the broader economy, of which consumer spending makes up 70 percent — is a 1.2 percent decline in consumer spending and a 5.2 percent increase in the savings rate in the second quarter.
That’s been driven by worries about a weak job market that have hammered consumers’ confidence. When the Labor Department releases its monthly jobs report Friday, economists expect it to show unemployment ticked up to 9.6 percent in July, close to its post-World War II high.
While some analysts were encouraged that U.S. auto sales in July climbed at their highest pace in 11 months, helped by the government’s rebate program, it hardly signals the beginning of an overall spending recovery.
