Back-To-School Retail Sales Suffer

NEW YORK (AP) - Retailers on Thursday posted sales declines for August as shoppers held back on back-to-school purchases and continued to focus on necessities, but overall results came in ahead of analyst predictions.

A monthly compilation of 31 retailers' results by the International Council of Shopping Centers and Goldman Sachs showed sales in established stores fell 2.1%, better than the 3.5% to 4% drop expected.

About half of the 30 retailers reporting August results missed expectations, but half topped them, according to a poll by Thomson Reuters. The winners were mainly discounters, but declines were less than expected in the specialty apparel and department store sectors as well.

"It really was all about value and price proposition here," said Ken Perkins, president of retail consulting firm Retail Metrics. "If you're off-price or discount-oriented and conscious of price points you fared very well in August."

There have been some signs of a stabilizing economy. On Tuesday, a report showed the U.S. manufacturing sector grew in August for the first time in 19 months. Also, a gauge of future U.S. home sales rose more than expected in July to the highest point in more than two years.

Any recovery will have to include an uptick in consumer spending, because it accounts for about 70% of economic activity. Thursday's results showed widespread sales declines, but there were some indications that may be turning around, said Michael Niemira, International Council of Shopping Centers' chief economist.

"Its still weak in the broad trend, but it is considerably stronger than it has been in some time," Niemira said. "We're starting to see some underlying improvement that is certainly encouraging."

He said the results could indicate a return to positive sales at established stores by the end of the year, because year-ago comparisons begin to ease in September, and become much easier after that, as retailers anniversary the year-ago sales dropoff amid the financial meltdown.

If Wal-Mart Stores, which stopped reporting monthly sales figures in May, were included in the monthly tally, it might already be positive, he added.

"I think August is the start of this transition to better times for the industry," Niemira said.

Discounters remained the best performers. Target said sales at established stores dropped 2.9%, much better than the 5.1% drop analysts expected. Health care products were strong sellers, while apparel and home products were weaker.

Meanwhile, warehouse club operators Costco Wholesale and BJ's Wholesale Club both reported results fell but also beat analyst expectations. Food remains a best seller and the clubs while apparel and jewelry were weaker.

TJX, which operates discount chains TJMaxx and Marshall's, reported a 5% increase, which topped expectations, as consumers hunted for bargains.

Upscale retailers meanwhile reported a weak month. Saks said results dropped more than analysts expected.

The teen sector was weak as back-to-school sales failed to take off. Hot Topic sales in stores open at least a year fell 8.1%, a bigger drop than the 6.9% predicted by analysts.

The Buckle, typically an outperformer, said results rose but missed analyst expectations.

Aeropostale, which has outperformed competitors by focusing on low prices, said results rose more than analysts predicted. Meanwhile, Abercrombie & Fitch, which has kept prices relatively high, reported a 29% drop, bigger than expected.

Labor Day falls a week later this year, so some back-to-school buys are likely to come later. However, the shift of the sales-tax holidays from July to August in most of the 14 states that have them partly offset the later Labor Day.

Limited Brands, which operates Bath and Body Works and Victoria's Secret, said sales in stores open at least a year fell 4%, but that beat the 5.9% drop analysts expected.

Gap also said results fell but came in above expectations, boosted by sales at its low-priced Old Navy chain.

Department stores remained a weak sector. Macy's said sales at established stores dropped 8.1% in August, a larger decline than analysts predicted.