business

The summer doldrums have set in for retailers, as continued high unemployment and weak consumer confidence kept shoppers at bay in June.

Sales at U.S. chain stores rose 3 percent compared with last year, according to the International Council of Shopping Centers. That figure doesn't include Wal-Mart, which no longer reports monthly sales results.

It was the third straight month in which retailers fell short of already-dampened expectations, according to Retail Metrics analyst Ken Perkins.

Luxury and department stores showed the biggest gains, getting a boost from Father's Day promotions and the run up to Independence Day. At Nordstrom, same-store sales surged 14 percent, Macy's rose 6.5 percent and J.C. Penney was up 4.5 percent.

Minneapolis-based Target Corp. and Menomonee Falls, Wis.-based Kohl's Corp. fell short of analysts' forecasts, though both showed increases compared with declines a year ago. Target's sales were up 1.7 percent, led by strong sales in food, health care and beauty. Kohl's posted an increase of 5.9 percent. Online sales rose more than planned and have grown 50 percent in the past year, Kohl's said.

"Since the beginning of the year, there's been a lot of optimism," said Sherif Mityas, a retail partner with the management consulting firm A.T. Kearney. "But it's still fits and starts in terms of recovery over this year."

June typically is a slow retail month, as stores focus on clearing out inventory to make way for the more important back-to-school and fall fashion season. The discounts and lack of newness make it a less reliable window into the consumer's state of mind, analysts say.

Although mortgage rates are at record lows, consumers can't shake all the other sour news about the economy: unemployment benefits set to expire this week for 3 million laid-off workers, a still-slumping housing market, the Gulf spill and an erratic stock market.

Consumers don't see economic conditions or their personal finances improving in the month ahead, according to a survey from Discover U.S. Spending Monitor. Fewer people think the economy is getting better and 48 percent believe it has worsened, a 3 percent increase since May.

The only bright spot is summer travel, where 17 percent plan to spend more on a July vacation, the highest percentage in two years.

Eric Beder, an analyst with Brean Murray Carret & Co., said inventory levels may provide more insight into retailers' health than same-store sales, a key yardstick because it compares results at stores open at least a year.

Heavy on inventory

"The story in June was aggressively cleaning out product," Beder said. "A lot of people entered the quarter heavy on inventory, and it was a huge mistake. Now they're paying the price for it. And they probably will continue to do so in July."

The teens segment remains overstocked, Beder said, while department and women's specialty stores have recovered from the early days of the recession and gotten their inventories in check.

Sales at Buckle dropped 7.3 percent, while Wet Seal was down 3.6 percent and Bebe down 3.4. Abercrombie was up 9 percent, and Aeropostale gained 8 percent.

With Wall Street looking for instant results, retailers are taking the long-term view, said A.T. Kearney's Mityas. The best performers are being cautious with inventory and mark-downs. That'll make for a competitive back-to-school season, he said.

"Gone are the days of putting out a sign of 40 percent off," Mityas said. "Now I'm going to give away a smart phone or have a social media sweepstake or contest. You'll see a lot more innovation and differentiation of promotions."

Jackie Crosby • 612-673-7335