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The Honolulu Advertiser
Posted on: Thursday, August 14, 2008

Retail sales weakened in July

By Martin Crutsinger
Associated Press

WASHINGTON — Retail sales delivered the weakest performance in five months in July as shoppers paying more for gas shunned autos.

With the most of the rebate check mailings now just a memory, there is concern the fragile economy could slow even more in the second half of this year.

The Commerce Department reported yesterday that retail sales fell 0.1 percent last month, the first decline since a 0.5 percent tumble in February. It was a worse showing than the flat reading economists had expected and followed a revised but still weak 0.3 percent reading for June.

Analysts said retail sales would have been more feeble without the $92 billion in rebate payments the government sent out in May, June and July. Those checks helped counter plunging home prices, rising unemployment and soaring gasoline prices.

Now economists are worried about what will happen next to spending.

"Cautious and uncertain consumers are watching their wallets — and with the back-to-school shopping season under way, that does not bode well for retailers," said Joel Naroff, chief economist at Naroff Economic Advisors.

Meanwhile, department store operator Macy's Inc. said yesterday that its second-quarter earnings dropped slightly and it warned that full-year profits will be below Wall Street expectations.

Macy's earned $73 million, or 17 cents per share, in the quarter ended Aug. 2, compared with $74 million, or 16 cents per share, a year earlier. Excluding two one-time items, Macy's earned 29 cents per share from continuing operations.

Analysts surveyed by Thomson Reuters had expected earnings of 19 cents per share on revenue of $5.75 billion.

Revenues fell 3 percent to $5.7 billion, while same-store sales (sales at stores open at least a year), dropped 2.1 percent.