By  on September 3, 2009

Back-to-school failed to get consumers back into stores in August.

Retailers reporting comparable-store sales on Thursday in many cases registered smaller declines last month than in July, and a few more were able to put up gains as state tax holidays moved to the more recent month. With Labor Day, and the opening of many schools, later this year than last and consumers shopping closer to need than ever, there was also the expectation that some b-t-s business would move into September.

Even without the calendar shifts, this month is expected to pose a lesser challenge for stores as their results will be weighed against the full-blown arrival of the credit crisis a year ago. Weaker comparisons also are expected to buoy year-on-year results as retailers move, somewhat tentatively, into the third quarter and on to the fourth.

While higher-priced stores again took a drubbing, August’s winners included off-price retailers and others offering hefty value propositions to attract consumers.

Esteban Bowles, a principal with the retail practice of A.T. Kearney, described August as “in line with expectations. It was a good news-bad news kind of story. Clearly there are signs that the economy is recovering…but we haven’t seen a full translation to the consumer and their spending habits.”

Still, investors viewed the moderation of weakness among retailers as a good sign and, preserving their hopes for improved comps going forward, sent the S&P Retail Index up 2.1 percent to 364.12, outpacing the Dow Jones Industrial Average’s 0.7 percent increase, to 9,344.61, and the S&P 500’s advance of 0.9 percent, to 1,003.24. (For more on stocks, see page 14.)

The consumer is still hunting for deals, so the retailers that will perform best will need to combine attractive prices with compelling product, Bowles said.

Denim, perceived as a value item for its versatility and general affordability, was a bright spot for many retailers in August, and should emerge as “the hot must-have item for the back-to-school season,” according to Jennifer Black of Jennifer Black & Associates. “There is a plethora of newness in fashion.Denim of all styles and washes is here to stay. Anything with embellishments like studs, chains and rivets is popular.”

Black said retailers that “modify pricing strategies in order to increase traffic and conversions” would be successful.

That could pose a problem for luxury retailers, said Kurt Salmon Associates vice chairman Peter Brown, who acknowledged there could be a “bright lining for the sector.”

Wealthy consumers, who pulled back on spending last fall because it seemed more inappropriate at the time, should come back, he said. Additionally, high-end retailers will take less of a hit in the months ahead because they will be better prepared for holiday with cleaner inventory and sharper price points, he said.

Bowles agreed, adding that the same principle applies to the ailing department store segment. Department stores tracked by WWD had an average comp decline of 9.9 percent in August, an improvement over the 11.7 percent pullback in July.

Kohl’s Corp., which posted the department store segment’s only comp increase, eking out a 0.2 percent gain, credited its strong accessories business and improved women’s division. Macy’s Inc. and J.C. Penney Co. Inc. recorded declines of 8.1 percent and 7.9 percent, respectively.

To Read the Full Article

Tap into our Global Network

Of Industry Leaders and Designers

load comments
blog comments powered by Disqus