August data show ‘glimmer of hope’ for US retailers

Back-to-school shoppers spurred by discounts

By Anne D’Innocenzio
Associated Press / September 3, 2010

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NEW YORK — This year’s back-to-school season isn’t as big a bust for retailers as they feared — or as big as last year’s — but it’s not great either.

Americans are spending only when the item and price are just right, according to August reports released yesterday by major retail chains. And analysts expect stores will need to keep discounting to keep shoppers spending this fall and in the holiday season while they grapple with job worries and tight credit.

“It’s a glimmer of hope that the numbers are coming in ahead of low expectations,’’ said Ken Perkins, president of research firm RetailMetrics.

Retailers that cautiously primed for a comeback five months ago as sales improved have been scaling back their hopes and making some tweaks to their merchandise again, analysts said. And stores will face more difficult comparisons starting this month because consumer spending had started rising by last September.

But yesterday’s reports helped ease fears of another double-dip recession, which have been stoked in recent weeks by a barrage of negative economic reports.

The International Council of Shopping Centers said its index of 31 major retailers rose 3.2 percent for August. That’s a tad better than the 3 percent forecast, but it barely compensates for a 2 percent drop a year ago.

For most stores releasing comparisons, they cover the four weeks that ended Saturday. Back-to-school shopping stretches from late July through mid-September.

Among the big winners were Costco Wholesale Corp., Victoria’s Secret operator Limited Brands Inc., and Macy’s Inc., whose results beat Wall Street forecasts.

Target Corp.’s results came in slightly below expectations, and chains that cater to teenagers had mixed results. Luxury retailers, which have been holding up much better, were mixed as some affluent shoppers are spooked by the wild swings in the stock market; Nordstrom Inc. fared well, but Saks Inc. had tepid gains.

Steve Koenig, director of industry analysis for the Consumer Electronics Association, said spending on overall back-to-school electronics showed “marginal improvement’’ over last year, which was a low point.

Wal-Mart Stores Inc. no longer reports monthly revenue.

Revenue at stores open at least a year is considered a key measure of a retailer’s health because it excludes the effects of expansion and stores closing during the year.

August’s figures continue a trend that began in April of shoppers holding back; it’s expected to continue at least through December. That frugality — after stores saw a surprise uptick at the holidays and through March — has meant an uneven recovery for retailers.

Tax-free holidays in nearly 20 states also helped, but the unrelenting hot weather dampened shoppers’ appetite for fall clothing.