Now, signs of life are emerging in the apparel industry. Companies like Macy's (M), Kohl's (KSS), and TJX (TJX), the parent company of TJMaxx, Marshalls and HomeGoods, have said in recent weeks that sales are starting to rebound at reopened stores.
While stores' foot traffic is still down significantly, the decline has eased. Foot traffic tumbled 97% in April compared to last year, according to Cowen. It was down 69% in the first week of June.
The encouraging developments have company executives and retail analysts asking a question: How long will the good news last?
Overall, industry sales in May are expected to climb 7% from April, according to consensus estimates from Refinitiv. The data is set to be released Tuesday. In April, sales plunged 16% from the prior month in the largest decline since 1992.
"The customer has been cooped up for the past eight weeks. Finally, she has a chance to get out," Michael O'Sullivan, chief executive at discount department store Burlington (BURL), said last month.
Still, he acknowledged it's too soon to say consumers are fully ready to return to physical stores. "It's difficult to know how long this pent-up demand will last," he said.
The problem is that consumers could become less willing to make discretionary purchases on things like clothing if money tightens up.
Retail executives and analysts say the federal government's stimulus payments and enhanced unemployment benefits — which include a $600 weekly increase for up to four months, on top of state unemployment benefits — have spurred consumer demand.
Those benefits are slated to expire at the end of July. Retailers' recoveries may stall without additional stimulus to consumers from the federal government, warned Neil Saunders, managing director at GlobalData Retail.
"If there is a second wave of the virus, this progress may be undone," he added.
The concern has made investors uneasy. The Dow tumbled around 800 points Thursday as a rising number of US coronavirus cases unnerved Wall Street.
'A very fluid environment'
Retailers have been cautious in their language given the uncertainty. Kohl's CEO Michelle Gass said Tuesday that the department store chain's more than 1,000 reopened locations are at 75% of their pre-pandemic sales.
Gass said she was "encouraged with the signs" but added that it was "still a very fluid environment."
In one positive sign, some retailers have said customers are coming back faster than expected.
For instance, Macy's had expected sales at reopened stores to return to about 20% of pre-pandemic sales levels, but CEO Jeff Gennette said Tuesday that reopened stores are bringing in about half the sales they normally tally.
"Our reopened stores are performing better than anticipated," Gennette said. Around 500 Macy's stores that began shutting down in March have since reopened.
Teen clothing stores and discount chains are also reporting improvement.
"On average, reopened stores are achieving 95% of last year's sales productivity," American Eagle (AEO) chief operating officer Michael Rempell said last week. "We had expected stores to open considerably worse than that." More than 600 American Eagle stores have reopened.
Discount stores, in particular, are benefiting from consumers hunting for bargains.
TJX CEO Ernie Herrman said for the 1,100 stores that were open on May 21 for at least a week, overall sales have been above last year's level. Due to the large influx of customers on weekends, TJ Maxx decided to implement store reopenings on Mondays instead of its original plan of reopening stores on Saturdays.
May's jobs numbers were also welcome news: the unemployment rate fell to 13.3% as employers added 2.5 million jobs. But the job market remains far weaker than it was pre-pandemic.
And analysts caution that positive sales trends may be fleeting as retailers recover from the massive blow they saw earlier this year. Retailers are also expected to close as many as 25,000 stores permanently this year, a new record.
"The recovery is fragile," GlobalData's Saunders said. "There are some signs that this is a temporary blip that starts to fade after stores have been open for a few weeks. In other words, it's latent demand from the lockdown period."
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