Retail sales reports for the month of June are arriving thick and fast this morning, but the news is lukewarm at best and the outlook for the back-to-school season is soft. Consumer worries over jobs and house prices have made them cautious and it seems that promotional pricing is the only thing that attracts shoppers to stores.

Costco Warehouse Corp. (NASDAQ:COST) reported a 4% rise in same-store sales, with a 2% increase in US sales and a 14% jump in international sales. Target Corp. (NYSE:TGT) sales rose just 1.7%, Limited Brands Inc. (NYSE:LTD) sales were up 6%, Macy’s (NYSE:M) rose 6.5%, Nordstrom Inc. (NYSE:JWN) rose a whopping 14.1%, American Eagle Outfitters (NYSE:AEO) sales fell 1%, Gap Inc. (NYSE:GPS) sales were flat, and Hot Topic Inc. (NASDAQ:HOTT) sales were down 2.1%. Wal-Mart Stores Inc. (NYSE:WMT), the world’s largest retailer, no longer reports monthly sales.

The sales gain at Costco included inflated gasoline prices and positive exchange rates on foreign sales. Excluding these, Costco’s same store sales rose 3%, lower than analysts’ expectations of 3.7%.

Target’s sales were expected to rise 2.7%, but came in a full point lower. Combined with Costco’s results, the large discount stores did not perform to expectations, which is not a good sign.

Apparel stores American Eagle, Gap, and Hot Topic could do no better than flat. Two of the three actually performed lower than expectations, continuing the slide at stores for teens. Hot Topic, which saw May sales fall 9%, made something of a comeback in June, beating expectations of a decline of -5.4%. Gap sales were flat with last year, but 2009 sales were down -10% from 2008, so this year’s figures represent no more than a Pyrrhic victory.

Department stores Macy’s and Nordstrom both posted better-than-expected sales, with Nordstrom beating expectations by nearly 5%.

Retail analysts noted that clothing stores bumped up discounting as June ended, trying to make up for weak sales earlier in the month. Discounting was about the same as a year ago, but that is worse than May, when discounts were 5% less than May 2009.

Overall, sales gains reached about 3.5% in June, compared with a gain of 2.7% in May. For the year so far, sales have gained 4% according to the International Council of Shopping Centers. The group expects total 2010 sales gains of 3.5%-4.5%, compared with a drop of -1.6% in 2009.

In order to live up to these expectations, shoppers are going to need to regain confidence that their jobs are secure and that their house is still worth something. That is not a slam-dunk.

No wonder Dollar Stores is becoming the next Wal-Mart.

Paul Ausick

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