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Back-to-school shoppers stick to essential items. Wal-Mart, warehouse clubs fare better than most
By Anne D'Innocenzio
Associated Press
Published on Friday, Sep 05, 2008
NEW YORK: When it came to buying their children new jeans and trendy tops, parents held the line: They focused on basics at discounters and waited for the best deals, resulting in weak August sales at many stores. That's a bad sign for the holiday season as families might be just as cautious with their gift-giving.
Even lower gas prices might not offer retailers much relief in the months ahead as shoppers are still seeing personal incomes fall and food prices remain high.
In fact, Wal-Mart Stores Inc., the world's largest retailer, as well as warehouse club operators remain among the few bright spots as shoppers focus on the lowest prices.
''Consumers are feeling pressured economically,'' said Stifel Nicolaus & Co. analyst Richard Jaffe. But he added that what's also hurt the back-to-school business is the lack of new trends to excite teens.
Ken Perkins, president of research company RetailMetrics LLC, agreed that shoppers remain focused on price.
''I don't see anything changing anytime soon,'' Perkins said. ''Parents are still going to buy for Christmas, but it is definitely going to be less than last year.''
As retailers reported their sales results Thursday, most mall-based apparel stores turned in sluggish results. Teen retailers that fared poorly included Wet Seal Inc., New Albany, Ohio-based Abercrombie & Fitch Co. and American Eagle Outfitters Inc. And high-end retailers Saks Inc. and Nordstrom Inc. posted weaker results as their affluent customers start to feel pinched.
The International Council of Shopping Centers-UBS sales tally rose 1.7 percent in August, below the 2 percent forecast. Excluding Wal-Mart, the results were flat with a year ago. Last month's pace was below the 2.3 percent average since the beginning of the industry's fiscal year in February. The tally is based on same-store sales, or sales at stores opened at least a year, and are a key indicator of a retailer's health.
Michael P. Niemira, chief economist at the ICSC, thinks that gas prices will have to fall to $3 per gallon or below before shoppers will increase their spending.
''The fall in oil prices is a bit of good news, but we need to see more positive economic news,'' Niemira said.
Helped by sales of groceries and back-to-school products, Wal-Mart reported a solid 3 percent gain in same-store sales. Analysts surveyed by Thomson Reuters had expected a 1.6 percent increase. Including fuel, same-store sales rose 3.5 percent.
Wal-Mart added that as with all seasonal events, customers are waiting longer to do their shopping and said that with more schools opening later this year, overall business picked up at the end of the month.
Rival Target Corp.'s same-store sales fell 2.1 percent, though that was better than the 2.6 percent decline expected. Target also said in a prerecorded call that back-to-school sales picked up speed late in the month. The discounter hasn't fared as well as Wal-Mart in the weak economy as Target heavily emphasizes nonessentials such as home furnishings and trendy jeans.
Columbus-based Limited Brands, the operator of Victoria's Secret and Bath & Body Works, suffered a 7 percent drop in same-store sales, mostly in line with the 6.9 percent decline estimated.
Abercrombie & Fitch's 11 percent drop was worse than the 7.9 percent expected.
NEW YORK: When it came to buying their children new jeans and trendy tops, parents held the line: They focused on basics at discounters and waited for the best deals, resulting in weak August sales at many stores. That's a bad sign for the holiday season as families might be just as cautious with their gift-giving.
Get the full article here.
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