Retail sales down in June 2006

by Darren

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Retail sales a pretty good indicator of the mood of the consumer (real and imagined). Sales were down a bit in June, with Wal-Mart leading a crop of companies having a bad quarter. Retail companies were hit by a myriad or problems which caused lower sales: not the least of which was heavy rains in the Northeast, which caused less people to shop.

Analysts are also worried about several issues I’ve talked about before and how it will effect the consumer:

But analysts worry that consumers are starting to feel the effects of increasing economic pressures including higher gasoline prices and interest rates. Higher rates have also helped cool the housing market. Last week, the Federal Reserve raised short-term rates to the highest point in more than five years but also lifted hopes that a respite from two years of increases might be in the offing.

The high cost of oil has cut into wallets in the last few months sharply. Combined with rising interest rates, the environment is a slow to no growth one for most retailers. That’s the reason you’re almost always better off purchasing the common shares of high-end retailers when you purchase retail stocks. Their well-heeled clientele are less likely to quit buying during a downturn.

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