Stimulus Over, Retail Seeks Back-to-School Boost

The last of the economic stimulus checks were mailed out on July 11, and there is no doubt the infusion of more than $110 billion into the economy boosted retail sales.

Household income, personal spending and retail sales all leaped in May after checks began going out in the first week of the month, trends that continued into June.

Target Corp., which limped through the holiday season with sales increases of less than 1 percent in December, saw its comparable-store sales rebound in May and June with increases of 5.5 percent and 6.6 percent, respectively.

Wal-Mart Stores Inc., which said it cashed more than $350 million worth of stimulus checks in May, saw increases of 3.9 percent and 5.8 percent in May and June, respectively.

Target appears to have been hit hard by the housing market collapse. In its April sales report, Target reported its softest sales areas were in Nevada, Florida, Arizona and parts of California, areas home to the highest concentrations of foreclosures and property value declines.

With the back-to-school shopping season upon us, the true strength of the retail sector will be tested. Americans headed back to school are expected to spend $594 per household this year. That adds up to more than $20 billion, a 5 percent increase from 2007 according to a survey released by the National Retail Federation.

Wal-Mart began its turnaround from dismal same-store sales reports last July after early rounds of back-to-school price cuts following the double whammy of the credit squeeze and spiking gas prices.

Since posting an August 2007 same-store sales gain of 3.1 percent, shares of Wal-Mart have rallied from as low as $42.09 in early September to as high as $59.95 in June.

The Bentonville retailer looks well positioned again as the economy remains tight. According to the NRF survey conducted by BIGResearch, 73 percent of Americans will shop for back-to-school supplies at a discount retailer, up from 67 percent last year.

There also could be a sustained boost from the stimulus checks for those who received their rebates before July. Just more than 20 percent of Americans said they set aside a portion of their checks for back-to-school shopping and 17.4 percent said they were shopping as much as two months early. That’s up from 14.6 percent in 2007.

Consumer Electronics Biggest Winners

For all Americans’ talk about saving their stimulus checks or paying down debt, results from May show many went for new electronic toys instead.

Sales of electronics jumped 7 percent year-over-year in May to $5.4 billion, according to the NPD Group, which researches consumer behavior. NPD reported May was the largest increase of 2008. Prior to May, electronics sales were down 5 percent since January.

Laptop computers and flat panel televisions were the biggest winners within the category, tying for the biggest percentage of sales at 14.7 each for a combined total of more than $1.5 billion.

Digital cameras, inkjet cartridges, MP3 players and desktop computers rounded out the top six revenue producers, accounting for 49 percent of all CE purchase, an increase from 44 percent over the same period in 2007.