Ahead of the Bell: Retail sales

WASHINGTON - Retail sales likely rose in June, though less than in May — a sign the economy is weak but stabilizing.

Wall Street economists surveyed by Thomson Reuters expect retail sales increased 0.4 percent in June, compared with a 0.5 percent gain in May and a 0.4 percent decline in April.

The Commerce Department is scheduled to release the report Tuesday at 8:30 a.m. EDT.

Retail sales increased in January and February after falling for six straight months, raising hopes that the economy's crucial consumer sector may be stabilizing. Setbacks in March and April clouded that prospect. With many families saving more and spending less, the start of a sustained recovery appeared to be delayed.

The numbers were somewhat stronger in May, but falling consumer confidence offset hopes for a quick recovery.

There were few encouraging signs in last week's same-store sales figures for June. Same-store sales — or sales at stores open at least a year — are considered a key indicator of a retailer's health.

Consumers appeared to be shopping for necessities and seeking discounts, buoying discounters but punishing brands like Abercrombie & Fitch. That chain's same-store sales fell 32 percent in June, more than expected. American Eagle Outfitters Inc. reported a drop of 11 percent.

Wal-Mart Stores Inc., the world's largest retailer, likely benefited from that trend, but its sales are no longer included in the monthly data.

Costco Wholesale Corp. saw same-store sales decline compared with last June, when federal stimulus checks helped business. But results were solid at Ross Stores Inc. and TJX Cos., which offer name-brand apparel at discounts. TJX reported a 4 percent gain — better than expected — and raised its second-quarter earnings outlook. Ross posted a 1 percent gain.

Still, financial and employment worries have discouraged shoppers. The latest federal report, which showed wages shrinking and higher job losses than expected in June, increased concerns about consumers' ability to spend in the months ahead.

Consumer confidence, as measured by the Conference Board, also dropped in June, reversing a three-month upward trend fueled by a stock market rally that also is fizzling a bit.

Given such economic headwinds, analysts say discounters and other low-price operators will keep drawing customers away from mall-based stores.

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