US retailers reveal disappointing sales for July
As consumers in the US are faced with higher food and fuel prices, figures show that retail sales in the US rose at the slowest pace in four months.
Consumer spending is closely monitored in the US as it makes up for over 60% of total economic activity.
The world’s largest retailer, Wal-Mart, posted disappointing sales for July and said the outlook between now and September looks poor.
Other major retailers including Limited Brands, Pacific Sunwear and Gap all revealed a decline in same-store sales of 5%, 4% and 11% respectively.
Wal-Mart’s rival, Target said same-store sales fell 1.2%, which was worse than expected.
Other US retailers including Hot Topic revealed that same-store sales fell 2.1%, while department store firms JC Penney and Kohl’s revealed a worse than expected performance in same-store sales.
However, one area of the retail sector that is benefiting from major retailers’ downfall are discount stores including Costco and BJ‘s Wholesale Club who posted a 10% increase and a 16.7% increase respectively.
In related news, figures released earlier this week discovered that consumers in the US have been hit by the biggest increase in prices in almost 30 years.
The Commerce Department reported that consumer spending before removing inflation rose by 0.6% in June after a 0.8% increase in May.
The US is battling with high inflation and a possible recession and, as a result, the US Federal Reserve left interest rates unchanged at 2% this week.
US interest rates have been on hold since April after aggressive cuts in late 2007 and early 2008.
The Bank of England’s Monetary Policy Committee today announced it was keeping interest rates on hold at 5% as it too, battles with runaway inflation and the risk of recession.
Retail sales on the UK High Street have slumped to their lowest level for a quarter of a century.
Figures from the CBI show that 61% of businesses said activity was lower in July compared with a year earlier while just 25% said it was higher.
UK retailers to announce poor results include Marks & Spencer, John Lewis and more recently, Woolworths.
The figures have led to City economists warning that Britain is on the brink of recession as the slowdown in consumer spending gathers pace.
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