NEW YORK, NY--(Marketwire -08/02/12)- Luxury retailers, who for the most part have been unaffected by the economic slowdown, took a hit Tuesday. Coach, the largest luxury handbag maker in the U.S. reported fiscal fourth-quarter revenue that fell short of analysts' estimates as a result of shrinking sales growth in North America. "In North America, however, an increasingly promotional environment led to lower growth than expected in factory stores." Coach's CEO Lew Frankfort said in a statement. The Paragon Report examines investing opportunities in the Luxury Retail Sector and provides equity research on Nordstrom, Inc. (JWN) and Saks Inc. (SKS).
On Tuesday the Commerce Department released a report showed that despite an increase in income consumer spending in the U.S. stagnated in June. According to the report consumer spending was flat in June after dropping 0.1 percent the month prior. Income and wages in the U.S. rose 0.5 percent, while the savings rate hit its highest point in a year, surging to 4.4 percent in June.
"There's been some back-tracking in the labor market so consumers are choosing to save the income rather than spend it," said BNP Paribas' Julia Coronado, chief economist for North America. "The third quarter will be pretty subdued."
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Nordstrom is one of the nation's leading fashion specialty retailers. The company is scheduled to release its second quarter financial results and 2012 outlook after the close of the financial markets on Thursday, August 9, 2012. Nordstrom reported an 8.1 percent increase in same-store sales for the five-week period ended June 30, 2012 compared with the five-week period ended July 2, 2011.
Retailer Saks Inc. reported that owned sales totaled $274.0 million for the five weeks ended June 30, 2012 compared to $258.6 million for the five weeks ended July 2, 2011, a 6.0% increase. Comparable store sales increased 6.0% for the month.
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