NEW YORK -- Consumer confidence reached a two-year high last week, sending some supermarket stocks up. Yet other retail sectors took it on the chin after Target lowered its sales outlook.
Target, Minneapolis, cautioned that its same-store sales forecasts would fall "well below plan" from earlier estimates of 5% to 7%. Wal-Mart Stores, Bentonville, Ark., similarly lowered its sales expectations Monday to 2% to 4% from 4% to 6%.
Target offered no reason for the lowered forecast, but some analysts suspected the weather as well, since sales were on plan during the warmer first two weeks of June.
Plus, consumers are finding their wallets lighter due to steep fuel prices. For the week of June 21, the cost of regular unleaded gas per gallon was up 29.5% from the same week in 2003, according to the Energy Information Administration. It is, though, down 6.2% from a month earlier, signaling some relief at the gas pump.
"There's no question that the combination of higher gasoline prices and reduced fiscal stimulus has served to dampen same-store sales gains for leading U.S. retailers," said Robert Buchanan, an analyst for A.G. Edwards & Sons, in a research report.
Still, consumers were upbeat, according to The Conference Board, which said the Consumer Confidence Index spiked 8.8 points to 101.9 in June, a high not seen since June 2002. This came after two months of stagnation, with the index hovering at approximately 93 for April and May.
"Looking ahead, consumers expect the economy to continue to grow at a healthy clip and to continue to generate additional jobs," said Lynn Franco, director of The Conference Board's consumer research center, in a statement. "And, with prices at the pump beginning to ease, the short-term outlook remains favorable."
Of those polled, 25.6% characterized current business conditions as "good," compared with 22.2% in May. Those consumers who said jobs were "hard to get" fell to 26.5% from 30.3%, while those who felt jobs are "plentiful" rose to 18% from 16.6%.
The outlook for the coming six months reflected a similar increase in optimism, with 23.4% believing business conditions would improve, up from 22.8% in May.
Those expecting more jobs to emerge inched up to 19.7% from 18.7%, while consumers expecting a boost in income rose to 19.3% from 17.1%.
"Confidence does not necessarily translate into consumer spending," warned Lynn Reaser, chief economist with Banc of America capital management.