Consumers are shopping less across the board People are doing less shopping across the board

Bargain-hunters and affluent alike are cutting back

Customers maneuver their purchases through a Home Depot store in Chicago earlier this month. With consumers pulling back, retailers are concerned about how they will fare the rest of the year. Customers maneuver their purchases through a Home Depot store in Chicago earlier this month. With consumers pulling back, retailers are concerned about how they will fare the rest of the year. Photo: CHARLES REX ARBOGAST, ASSOCIATED PRESS Photo: CHARLES REX ARBOGAST, ASSOCIATED PRESS Image 1 of / 1 Caption Close Consumers are shopping less across the board 1 / 1 Back to Gallery

N EW YORK — From affluent shoppers at Saks to bargain-hunters at Target, from Home Depot to office supplier Staples, consumers are pulling back, and that's hurting retailers and raising more concerns about how they'll do the rest of the year.

The latest round of second-quarter reports show more signs of financial stress on shoppers, as Target's customers stick to necessities and have trouble making their credit card payments. Saks says it's now seeing high-end designer consumers cut back, whereas previously it was only the aspirational customers who were retrenching.

While falling gasoline prices in recent weeks should provide some relief, economists say that won't be enough to offset all the other economic problems out there, from a housing slump and a weakening job market to soaring food prices and tighter credit.

Stocks down

Investors weren't pleased with the latest reports, either, sending retail stocks down along with the broader market. Home Depot's shares fell nearly 4 percent, while Staples' dropped more than 4 percent and Saks' stock tumbled more than 8 percent.

The increasing frugality among consumers is challenging even Target's forte in cheap chic. The discounter, whose performance has been lagging Wal-Mart Stores, reported a 7.6 percent drop in profit as its customers focused on necessities like food and paper towels. Target offered a cautious outlook for the third quarter amid an erratic start to the back-to-school season and said it would slow its store expansion in fiscal 2009.

Home Depot, the nation's largest home improvement retailer, saw its profit drop 24 percent and reiterated its weak outlook for the year.

Still, the results weren't as bad as Wall Street expected, and the retailer benefited from a return of do-it-yourselfers.

Saks loss surprises

Saks, meanwhile, reported a wider-than-expected loss for the second quarter and forecast weak same-store sales growth in the second half. Staples, which is set to post final second-quarter results on Sept. 3, warned that results, excluding its acquisition of Corporate Express, would be softer than anticipated, dragged down by lower customer traffic and smaller orders.

At Home Depot, executives said one bright spot was basic repair jobs that shoppers are undertaking, even as bigger-ticket purchases continue to fall.

Net income for the three months ending Aug. 3 fell to $1.2 billion from $1.59 billion a year earlier. Revenue slid 5.4 percent to $21 billion and same-store sales fell 7.9 percent. Target said it earned $634 million for the three months ended Aug. 2, down from $686 million a year earlier.

Sales grew 5.7 percent to $15 billion, while same-store sales slipped 0.4 percent.

Saks said it lost $31.7 million for the quarter, wider than its net loss of $24.6 million in the year-ago period. It expects same-store sales for the second half of the year to be flat to a decline in the low-single digits.