Retailers Aren't Seeing Back-to-School Boost
Some Discounters Enjoy July Gains, While Luxury Department Stores Fare Worst
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Friday, August 7, 2009
The back-to-school shopping season got off to a tepid start this year, with many of the country's biggest chain retailers on Thursday reporting sales declines for July.
Several teen stores posted double-digit drops at locations open at least a year -- a key measure of a retailer's health known as same-store sales. At Abercrombie & Fitch, same-store sales plunged 28 percent in July compared with a year ago, the worst performance of any chain. Wet Seal fell 12 percent, and American Eagle Outfitters declined 11 percent.
"I'm sad that it's kind of disappointing," said Chandi Neubauer, an analyst with Majestic Research. "There's companies in here that I think, 'You've got to be kidding me.' "
Meanwhile, retailers known for bargains were able to win over back-to-school shoppers and produce strong results: Same-store sales at Aeropostale jumped 6 percent. Ross Stores climbed 4 percent. And TJX, which owns TJ Maxx and Marshalls, rose 4 percent.
"Clearly the spending environment remains difficult," said Frank Badillo, senior economist for consulting firm Retail Forward. But he added, "The fact that the numbers aren't getting any worse is a good sign."
July is the kickoff for the back-to-school shopping season, and retailers this year faced an uphill battle. Consumers had more money in their pockets last year because of the federal economic stimulus payments. Several states have pushed back popular sales tax holidays into August, as many students start school later this year. (Virginia's tax-free weekend begins Friday.) In addition, many retailers have reduced their inventories, which could help their profit margins but hurt overall sales.
According to an analysis by the International Council of Shopping Centers, an industry trade group, same-store sales at the 33 retailers that reported results Thursday fell 5 percent in July. Almost every category of retailer registered a decline, except drug stores, which were up 1.3 percent. Luxury department stores fared worst, down 12.5 percent. Even discounters, which have held up as shoppers become more value-conscious, dropped 4.1 percent.
Those results do not include sales from Wal-Mart, the largest retailer in the world. The company stopped reporting monthly same-store sales in May. Including Wal-Mart, retail sales would likely have increased, analysts said.
