Consumer Nation

How Much Did Promotions Help, or Hurt, Retailers in June?

Will sales in June force retailers to cut or raise their second-quarter forecasts?

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Overall, analysts are painting a bright picture for the month, suggesting that marked-down merchandise drove consumers to the stores to shop without hurting profit margins.

The Thomson Reuters Same-Store Sales Index is expected to rise 4.9 percent in June from the prior year's 3.1 percent gain. Since a 3.0 percent same-store sales gain reflects a healthy consumer, the forecast is encouraging.

"Promotional activity looks higher on the surface, but we see little risk to second-quarter earnings as inventories are well-controlled," said John Morris, a specialty retail industry analysts at BMO Capital Markets, in a research note.

Morris suspects that consumers found few fashion must-have items to inspire them to buy, so sales among the specialty retailers may turn out to be a bit disappointing. But since June is largely a clearance month, that may not be indicative of broader consumer shopping patterns, Morris said.

As a result, he's looking to July to be a much better indication of how consumers will behave in the months ahead. July marks the beginning of the back-to-school shopping season.

Department stores and discounters, as a group, should see the biggest gains, according to analysts surveyed by Thomson Reuters. Warehouse clubstores Costco and BJ's Wholesale are expected to see the biggest gains. (Although their same-store sales are boosted by higher gasoline prices in the latest period.)

A breakdown of the average analyst estimates for the month, as reported by Thomson Reuters, follows:

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