US retail sales struggle in July

Results from US retailers including Wal-Mart have shown disappointing sales for July, with the outlook between now and September looking poor.

The results came as shoppers ran out of tax rebate cash, and consumers faced rising petrol and food prices.

Wal-Mart said same-store sales in July rose 3%, below analysts' expectations. Meanwhile rival Target's same-store sales fell 1.2%, worse than expected.

Limited Brands, Pacific Sunwear and Gap all posted drops in sales as well.

"It's difficult to see where some sort of boost in spending is going to come from"
Ken Perkins, Retail Metrics president

Limited Brands reported a 5% decline in same-store sales, Gap suffered an 11% same-store sales drop, and Pacific Sunwear of California posted a 4% drop.

Elsewhere in the US retail sector, Hot Topic's same-store sales fell 2.1%, while department store firms JC Penney and Kohl's both posted bigger-than-expected drops in same-store sales.

'Marginal effect'

Consumer spending is closely watched in the US because it accounts for about two-thirds of total economic activity.

The US government returned roughly $100bn in tax rebate cash to consumers between late April and mid-July, in an attempt to kick-start the economy.

However, analysts said the rebates had produced only a limited impact.

"The stimulus [tax cheques] really had a marginal effect at best and it has run its course and there's no carry-through," said Retail Metrics president Ken Perkins.

"It's difficult to see where some sort of boost in spending is going to come from."

Wholesale boost

US consumer prices increased at their steepest rate in more than 25 years during June, according to government figures released this week.

Last week a Labor Department report showed the US unemployment rate hit a four-year high during July.

However, one section of the retail sector has benefited from increasingly straitened times, as wholesale club operators produced results ahead of Wall Street estimates.

Costco reported a 10% increase in same-store sales, and BJ's Wholesale Club reported a 16.7% increase in same-store sales.

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