August sales helped by large discounts

Many U.S. retailers reported stronger-than-expected August sales Thursday, but they had to use steep discounts to attract back-to-school shoppers.

The unusually high level of discounting raised concerns about margins for this quarter. It also showed that apparel chains might have to keep offering bigger incentives at a time when consumers are spending more on their homes, cars and other durable items.

The level of discounting “was certainly higher than last year,” said Ken Perkins, president of the consulting firm Retail Metrics. “They seem to be above the norm. That was emblematic of just the lack of demand for back-to-school,” the second-biggest selling period of the year for U.S. retailers, behind the winter holidays.

Same-store sales for the nine U.S. chains that reported August sales rose 2.9 percent but were hurt by results from Gap and L Brands. Wall Street had expected a 3.2 percent increase.

— Reuters

United will rehire nearly 600 pilots

United Airlines said it will call back almost 600 pilots who were furloughed during a time when fuel prices spiked and the recession forced the airline to shrink.

Training for the returning pilots will begin next month and be completed by the end of the year, the airline said.

The returning pilots are the last of 1,437 United pilots furloughed in 2008 and 2009, according to the Air Line Pilots Association. United has about 12,000 pilots.

The recall comes as demand for pilots at the big airlines is beginning to recover after a decade of airline bankruptcies, economic disruption and changing retirement rules that kept senior pilots flying longer instead of retiring.

In addition, pilots will require more time off between flights under new federal rules that take effect next year, which creates a need for more pilots.

Delta Air Lines has said it wants to hire 300 pilots starting in November. American Airlines has offered recalls to all of its furloughed pilots, although some have exercised an option to defer their return.

US Airways said last month that it would recall the last 66 furloughed America West pilots. Those two airlines merged in 2005. The pilots had been laid off in 2008.

— Associated Press

Also in Business

Companies in the U.S. service sector expanded at their fastest pace in nearly 8 years last month as sales and orders grew and employers ramped up hiring. The Institute for Supply Management said Thursday that its non-manufacturing index rose to 58.6 in August, from 56 in July. The new mark is the index’s highest point since December 2005. Any reading above 50 indicates expansion.

Carnival reached a tentative agreement with the Environmental Protection Agency on Thursday to reduce air pollution from the massive diesel engines powering its cruise ships. Carnival will deploy scrubbers to reduce sulfur dioxide and filters to trap soot on as many as 32 ships over the next three years. At port, the ships will either use a lower-sulfur fuel or plug into the electrical grid, rather than idle, to reduce pollution.

— From news services

Coming Today

8:30 a.m.: August jobs report released.

Earnings: Smithfield Foods.