Retail sales have been soft since early summer, and August doesn’t appear to be a get-well month for retailers either. Research firm Retail Metrics projects that August sales will rise just 1.7% compared to August 2011 sales. Last year sales rose 5.5% in August, following growth of 3.6% the year before.
The reasons are a bit complicated, and different stores have different problems. An article in today’s New York Times indicates that kids are waiting to buy until they return to school and see what the other kids are wearing. Another reason is the unusually hot weather which has kept consumers home. Higher gasoline prices factor in as well.
Some stores are already seeing soft sales in the back-to-school season. Pacific Sunwear of California Inc. (NASDAQ: PSUN), Aeropostale Inc. (NYSE: ARO), Big Lots Inc. (NYSE: BIG), and Abercrombie & Fitch Co. (NYSE: ANF) have reported softer sales according to Retail Metrics. A&F apparently got its fall and winter clothing into the stores too early and saw July sales fall by 10%.
Some retailers are reporting good sales though. Reports from The TJX Companies Inc. (NYSE: TJX), Ross Stores Inc. (NASDAQ: ROST), Wal-Mart Stores Inc. (NYSE: WMT), and American Eagle Outfitters Inc. (NYSE: AEO) indicate a somewhat better back-to-school shopping season.
Back-to-school is second in importance only to the year-end holiday season to retailers. July sales were soft and a rise of 1.7% in August isn’t much better. Maybe fashion-conscious teens will put some fire into September.
Paul Ausick
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