Retailers’ mixed bag

Many of the largest U.S. retailers missed the mark in August, failing to entice back-to-school shoppers despite new fashions and low prices.

Overall retail sales fell 2.9 percent compared with a year earlier, marking the 12th consecutive month of declines, according to Thomson Reuters’ tally of 30 major chain stores Thursday.

But there were some bright spots in the August report.

Sales fell less than expected – Wall Street had figured on a 3.8 percent drop – and improved from July’s 5.1 percent decline, leading industry experts to surmise that the worst may be over for the battered retail industry.

“It’s usually little signs that something’s changing. In this case, it’s some pickup in discretionary purchases and some pickup in customer traffic,” said Michael Niemira, chief economist at the International Council of Shopping Centers, who said the August results were the industry’s strongest showing since September 2008. “It’s these little pieces that paint a picture of a turning point, and I think that’s what we’re seeing.”

Still, half of the retailers surveyed last month missed expectations. Several well-known chains, including teen retailer Abercrombie & Fitch Co. and luxury department-store chain Saks Inc., posted double-digit declines.

So many poor showings leaves plenty of room for concern that although the industry may have bottomed out, a full recovery could be months away and consumers could again scrimp during the all-important holiday season.

With an 11.5 percent decline, teen apparel was the weakest performer overall, a disappointing result for a sector that derives a significant portion of its annual revenue from back-to-school sales.

Analysts said low teen employment this summer and tighter budgets were partly to blame. A later Labor Day holiday is also delaying the start of some schools, which may push some spending into September.

Abercrombie & Fitch posted a 29 percent drop, Wet Seal Inc. reported an 11.2 percent decline and American Eagle Outfitters Inc. saw sales fall 7 percent.

Results are based on sales at stores open at least a year, called same-store sales and considered an important measure of a retailer’s health because they exclude the effects of new locations.

Department stores also fared poorly, with sales falling at Saks (19.6 percent), Macy’s Inc. (8.1 percent) and Nordstrom Inc. (7.6 percent). In all, the sector saw sales decline 7.1 percent.

But it wasn’t all bad news in August.

One of the month’s biggest surprises came from Gap Inc., which posted a 3 percent decline, better than the expected 7 percent drop. Sales at its Old Navy chain increased a healthy 4 percent; analysts had estimated that the brand would see sales fall 6.4 percent.

The San Francisco company, also parent to the Banana Republic chain, has been undergoing an image makeover in an effort to pull out of a prolonged slump.

Last month, Gap stores launched a denim line called 1969 Premium Jeans that company executives are hoping will help the retailer capture a share of the designer denim market.

Several discounters also beat Wall Street expectations as parents opted to buy school supplies from lower-cost sellers.

Costco Wholesale Corp. reported a 2 percent decline, better than the 5.7 percent decline analysts had expected. Sales at Target Corp. fell 2.9 percent; analysts had expected a 5.1 percent drop.