Stimulus Checks Boost Retail

Many Stores See a Welcome Bump in June Sales Figures

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NEW YORK ( -- After months of getting hammered by negative same-store sales results, retailers were provided a temporary reprieve in June as consumers spent those stimulus checks.
Some retailers, like JCPenney, are taking a more cautious stance on the much-lauded stimulus checks, believing that any benefit from the checks will be short-lived.
Some retailers, like JCPenney, are taking a more cautious stance on the much-lauded stimulus checks, believing that any benefit from the checks will be short-lived. Credit: AP

"June came in better than expected, thanks to stimulus checks and warmer weather," Michael Niemira, chief economist and director-research at the International Council of Shopping Centers, said in a statement. "Sales continue to be supported by the wholesale and discount sectors."

Business picks up at major chains
Costco posted a 9% jump in sales at stores open at least a year, while BJ's saw an 8.3% gain, excluding gasoline sales. Family Dollar posted an 8% jump. Wal-Mart posted a 5.8% increase, excluding gasoline sales, its biggest same-store sales gain in more than a year. That led the company to increase its earnings-per-share guidance for the second quarter.

The retailer said that higher sales were driven by higher average tickets, as well as an increase in customer traffic. "The economic stimulus checks also were a positive factor in Wal-Mart U.S.'s higher traffic. Sales in grocery and some home categories suggest that customers continue to eat, entertain and even vacation at home more often," the retailer said in a statement.

Some other chains didn't do as well. TJX Cos. reported a 5% increase, and Target posted a modest 0.4% gain in same-store sales.

Penney's remains guarded
JCPenney, which reported a 2.4% decrease in same-store sales, took a more cautious stance on the much-lauded stimulus checks. "While our June results may have included a modest benefit from the receipt of stimulus checks by customers, we continue to believe that any such benefit will be short-lived," said Kristin Hays, manager-investor relations, in a sales call. "Customers continued to respond to promotional and clearance pricing during the month."

Aggressive sales and marketing efforts also paid off at Kohl's, which posted a 2.3% gain in same-store sales. But not everyone benefited. Gap Inc. saw sales at stores open at least a year fall 7%, while Limited Brands reported a 9% decline. Though same-store sales at luxury purveyor Saks were up 1.9%, Nordstrom reported an 18.6% drop and Neiman Marcus saw a 2.4% slide.

Across the board, an emphasis on sales and clearance activities drove traffic. But, although June is typically a promotional month, the question remains whether retailers will be able to entice wary shoppers at any price in the coming months.

"We believe the consumer is in the process of ratcheting spending levels downward," wrote retail analyst Jennifer Black in a research note. "We interpret that to mean that a lot of the mediocre sale merchandise will simply not sell at any reasonable margin."

Hoping for back-to-school bonanza
To boost sales this month, retailers are setting their sights on the all-important back-to-school season. Kohl's is moving its school merchandise onto the floor and beginning back-to-school marketing earlier than in years past. Sears, Roebuck & Co. took its "Arrive Lounge" website, which promotes the retailer's "Don't Just Go Back, Arrive" back-to-school message, live at the end of June, although it hasn't yet been promoting it. And JCPenney set its floors for back-to-school this week, nearly two weeks before its marketing campaign kicks off on July 18.

The National Retail Federation is expecting the second half of the year to be stronger than the first, noting that economic stimulus checks are helping and parents have set a portion aside for back-to-school shopping. Retailers also foresee positive comparisons against slower sales figures from the second half of last year.
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