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Apparel Sales Fall in July: MasterCard

U.S. sales of clothes and shoes fell in July as cash-strapped consumers cut back spending
further to pay for nondiscretionary purchases such as food and gasoline, MasterCard Advisors said in a report Wednesday.

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Overall July apparel sales declined 0.8 percent from a year ago, with women's apparel sliding 3.3 percent, the eighth-straight month that sector fell, according to a report by SpendingPulse, the retail data service of MasterCard Advisors, an arm of MasterCard Worldwide.

Sales of men's apparel increased 0.9 percent, while overall footwear sales fell 0.9 percent.

"This is one of the weaker months I've seen in the last five years," said Michael McNamara, vice president of SpendingPulse, who said consumers are cutting back more on discretionary items since the U.S. government's tax rebate checks mostly cycled through the economy before July began.

The results from SpendingPulse provide an early look into the strength of July same-store sales, which retailers such as Target , Wal-Mart Stores and Gap will report on Thursday.

June's SpendingPulse results reported a 0.3 increase from the previous year, mainly helped by the Father's Day holiday and rebate checks.

McNamara said a slight increase in sales was reported at the end of July after 11 states held sales tax holidays as the back-to-school shopping season kicked into gear. (Watch the accompanying video to hear what analysts have to say about back-to-school stocks.)

He said the late buying indicated shoppers were more aware of bargains amid a sluggish economy.

"With the pressures that are on the consumer right now, it seems as though they're trying to take advantage of any help they can get," McNamara said.

SpendingPulse data is derived from aggregate sales in the U.S. MasterCard payment network, coupled with estimates on all payments, including cash and checks.

The report said e-commerce sales were up 7.3 percent in July, while electronics and appliance sales were down 2.9 percent.

"We're continuing to see a divergence here in where the retail dollars are flowing," McNamara said. "They really seem to be flowing into the nondiscretionary areas like drugstores, food and gasoline, and it's really coming at the expense of some of these retailers such as apparel and electronics and appliances."