It’s pretty simple. You have less, you spend less.
As retailers reported their monthly figures Thursday, the weakness appeared to cut across all sectors, particularly apparel sellers. Among the biggest disappointments so far were teen merchant Wet Seal Inc., The Children’s Place Retail Stores Inc. and Limited Brands Inc., which owns Victoria’s Secret.
Even low-priced operator Costco Wholesale Corp. struggled with a same-store sales decline compared with a year ago, when business was helped by stimulus rebate checks.
Same-store sales — sales at stores open at least a year — are considered a key indicator of a retailer’s health.
“Consumers are under severe pressure on the job front, so discretionary spending is just not happening, “said Ken Perkins, president of retail consulting firm Retail Metrics LLC.
“This is not setting up well for the back-to-school season.”
Rainy weather across a broad swath of the country was a factor in depressing sales of seasonal goods last month. But shoppers clearly are being discouraged by financial worries.
The latest jobs report from the government, which showed shrinking wages and higher-than-expected job losses last month, is increasing concerns about consumers’ ability to spend in the months ahead.
Merchants are relying more now on shoppers’ paychecks to fuel purchases because consumers’ two other key sources of funding — credit cards and home equity loans — have shrunk. But, seeing their earnings dwindle, shoppers are continuing to seek 70 percent discounts.