Back-to-school sales buoy retailers’ figures

NEW YORK – It seems that teen spending helped defy the expectations of a disappointing August for the nation’s retailers.

Young people buying – or persuading their parents to buy – fashions like skinny jeans and leggings gave the nation’s retailers solid sales during a month when consumers were expected to pull back amid fears about a weakening economy. As retailers announced their sales results for the month Thursday, the biggest winners were teen retail stalwarts like Abercrombie & Fitch Co. and Wet Seal Inc. And Wal-Mart Stores Inc. scored with an ad campaign that was aimed at teens, not their parents.

Still, while back-to-school spending is so far a success, there were some signs of consumers’ financial strain in merchants’ results, leaving the outlook for the holiday season unclear. J.C. Penney Co. reported disappointing sales results, citing weak sales in big-ticket items. And Gap Inc. again struggled with its fashions.

Overall, “the early signs are that back-to-school is doing better than expected,” said Jharonne Martis, an analyst at Thomson Financial.

John Morris, managing director at Wachovia Securities, was less upbeat, noting that teens who don’t worry about money as much as their parents are the ones driving August sales.

“Teens are not likely to feel firsthand the impact of the slowdown,” Morris said.

Still, the generally solid performance in August – a time when stores aim to do the bulk of their back-to-school business – is comforting as analysts have been predicting a consumer spending slowdown in the second half; their concerns were heightened after June’s sales stalled but business rebounded in July, helped by clearance sales of summer goods.

The International Council of Shopping Centers-UBS preliminary sales tally of 52 retailers rose 2.9 percent in August, compared with the year-ago period, but that figure is expected to be revised upward to about 3.3 percent after drugstores report results next week, according to Michael P. Niemira, chief economist at the trade association. The tally is based on same-store sales, or sales at stores open at least a year, a key indicator of a retailer’s health.

August’s performance compares with a revised 3.9 percent increase in July and a revised 3.0 percent gain in June.

“Wal-Mart had a 2.7 percent gain in same-store sales last month. Analysts polled by Thomson Financial expected a 2. 5 percent gain.

“Rival discounter Target had a 2.8 percent same-store sales gain, below the 3.1 percent Wall Street estimate. This was the second month in a row that Target missed Wall Street projections.

Mall-based apparel and department stores had a mixed performance.

“Penney posted a 0.5 percent decline in same-store sales in its department store business, below the 1.8 percent increase analysts expected. The company reported weaker sales of big-ticket items, particularly furniture.

“Federated Department Stores Inc., parent company of Macy’s, had a 3.8 percent gain in same-store sales, slightly below the 4.0 percent estimate.

“Upscale Nordstrom said its same-store sales rose 7.1 percent; analysts expected a 3.3 percent gain.

“Limited had a 9 percent gain in same-store sales, better than the 6.2 percent forecast.

“Ann Taylor had a modest 1.9 percent gain in same-store sales, below the 3.1 percent Wall Street expected.

“Gap, dragged down by business at its namesake stores and Old Navy, had a 7 percent decline in same-store sales, worse than the 3.4 percent projection.

“Among teen retailers, Abercrombie & Fitch had a 6 percent gain in same-store sales, better than the 2.1 percent estimate.

“Wet Seal had a 8.7 percent same-store gain, better than the 7 percent forecast.

“American Eagle Outfitters Inc. reported an 11 percent gain in same-store sales in August, better than the 9.1 percent estimate.

“Hot Topic Inc. suffered a 6 percent drop in same-store sales, worse than the 5.7 percent forecast.