June sales heated up for stores, in a sign that Americans likely will continue to spend during the important back-to-school shopping season.
U.S. retailers reported their strongest sales gains since January, as shoppers, enticed by warm weather and an improving economy, took advantage of summer discounts.
Revenue at stores opened at least a year - an industry measure of a retailer's health - rose 4.1 percent in June compared with the same month a year ago, according to a preliminary tally of 13 retailers by the International Council of Shopping Centers. The mall trade group had expected an increase of 3 to 3.5 percent.
The data offers positive signs for the back-to-school season, which is the second-biggest shopping period behind the winter holidays. June is when stores clear out summer merchandise to make room for goods for fall, so brisk sales mean that stores likely won't be stuck with piles of summer shorts and T-shirts that they need to get rid of as the back-to-school season kicks off later this month.
June's performance was its best performance since January's 4.5 percent gain and showed a gradual improvement since early this spring. The tally was up 3.4 percent in May and 3 percent in April.
Going forward, Michael P. Niemira, chief economist at the International Council of Shopping Centers, expects that total sales for the back-to-school season, which runs from mid-July through mid-September, will be up a solid 3.1 percent to $42.2 billion. That would be less than the 3.6 percent gain in 2011, but in line with the 3.3 percent pace on average over the past 10 years.
Stores are benefiting from an improving economy that has gained a robust 195,000 jobs in June. Employers have added an average 202,000 jobs for the past six months, up from 180,000 in the previous six. The housing market is also gaining strength. And consumer confidence in June is at the highest level since January 2008, according to the Conference Board.
Indeed, while big chains such as Wal-Mart Stores, Target Corp. and Macy's Inc. no longer report monthly revenue, the stores that do offer economists a snapshot of consumer spending habits. In total, the retailers that report monthly data represent about 6 percent of the $2.4 trillion in U.S. retail industry sales.
Analysts expect that stores are going to have to continue to offer discounts heading into the back-to-school shopping season to meet the needs of deal-hungry shoppers. In fact, department store chain Kohl's Corp. is already discounting school uniforms anywhere from 30 percent to 35 percent and certain backpacks from 20 percent to 40 percent.