US fashion retailers continued to feel the negative impact of weakening consumer confidence in their February sales updates as soaring unemployment plagued the country.
Fashion rivals Gap and American Eagle reported like-for-like sales falls of 12 per cent and 7 per cent respectively, while Urban Outfitters missed analyst expectations with net income for its fourth quarter plunging to US$40.5m (£29.4m) from US$53.6m (£38.9m) against the same period the previous year.
Macy’s like-for-like sales in February dropped 8.5 per cent and Saks suffered a decline of 26 per cent for the month.
Consumer confidence has been hit mainly by spiralling unemployment, which in February alone exceeded 651,000. This marks the third month in a row where unemployment in the US has exceeded the 650,000-mark.
According to reports, official US general retail same-store sales are expected to be down 1.2 per cent overall for February. However, MHE Retail chairman Edward Whitefield said that this figure is “grossly underestimating” the real impact that the downturn is having on the US retail market.
He pointed to retailers reporting double-digit like-for-like sales slumps. “These retailers would have been smiling if their sales were down just 1.2 per cent.” He added: “About 8 per cent of the workforce is now unemployed; this is monumental.”
The only bright spark in February was Wal-Mart, which capitalised on its value offer to deliver like-for-like sales up 5.1 per cent, excluding petrol.
However, not all value retailers managed to post positive like-for-like sales last month, with Target recording a slump of 4.1 per cent and Costco down 3 per cent.
Whitefield said there are no signs of improvement yet, with any green shoots being between nine and 12 months away. “They are suffering from a double whammy with increased unemployment, and people with money have lost a certain level of wealth so are saving more,” he said.