Same-store sales comparisons are about to get a lot easier, but that doesn’t mean business conditions will.

This story first appeared in the September 3, 2009 issue of WWD. Subscribe Today.

August same-store sales results, being reported today, are expected to be better than July’s and mark the last month of difficult comparisons with 2008 dating back to the days before last September’s financial crisis. However, analysts warn that investors have to be careful not to read too much into the numbers.

On a call to preview today’s results, Stifel Nicolaus retail analyst Richard Jaffe expressed concerned that investors, who’ve driven up retail shares nearly 60 percent since March 6, might be overdoing it.

“We’re convinced of significant improvement year-over-year given last quarter’s depressed results, but we fear that the investors have grown overly optimistic, ahead of themselves, if you will, and are discounting a dramatic comeback already,” said Jaffe. “‘Dramatic’ is the key word here.”

While Wall Street may be anticipating an early comeback, he said August comps would at least provide a better idea of how this year’s later back-to-school season has shaped up.

In retailers’ favor is a series of state tax holidays that shifted to August, putting more pressure on July, but working against them is a later Labor Day than in 2008, sales for which will fall into September. One factor could neutralize the other.

“A strong start to August probably lost some steam to end the month but we are looking for a sequential improvement in our softline index, to a drop of 2 percent compared with a 3.4 decline in July,” said Barclays Capital retail analyst Jeff Black.

According to the International Council of Shopping Centers, retail sales for the week ended Aug. 29 fell 0.5 percent from the prior week and 0.7 percent from the comparable week in 2008. The first week of August came in flat versus the prior week but sales were up 0.4 percent on a year-over-year basis. ICSC predicts August comps declined between 3.5 and 4 percent.

But like Jaffe, Black looks at the month as a way to illuminate b-t-s results and even shed some light on the third quarter and back half of the year.

“August offers the first read on back-to-school,” Black said. “The teen retailers and Gap Inc. are the most important to watch this month. September is a more important barometer for women’s retailers.”

Retail analyst Jennifer Black of Jennifer Black & Associates said as new fashion trends emerge, companies would modify pricing strategies in order to increase traffic and conversions.

She pointed to the Gap’s denim relaunch, which “should provide the company with a nice lift for August and September sales, and the timing couldn’t be more perfect.”

The overhauled premium jeans collection, which sells for under $60, was designed to accommodate current economic trends.

Black also said Urban Outfitters Inc., which does not report monthly comps, as well as teen retailers Aéropostale Inc. and American Eagle Outfitters Inc., both of which do report monthly, should all be “winners” for b-t-s and the fall season.

With consumers continuing to eke out value and stray from higher-priced retailers in the department and specialty store sectors, discounters and off-price stores are expected to once again come out on top.

“We believe market share gains for the discounters are likely to persist as the consumer remains focused on value and as the savings rate remains elevated relative to recent years,” said William Blair & Co. broadlines analyst Mark Miller, who added “the differential in comp sales performance between the discount retailers and the department stores remains near record levels.”

Some analysts are looking beyond August comps entirely.

“Will anyone who’s not on vacation or at the U.S. Open this week even care about August as September is the start of the two-year negative comp stacks [results]?” said J.P. Morgan retail analyst Brian Tunick. “September comps will be the first real evidence if the bulls’ top-line recovery thesis is taking hold and if fourth-quarter comps in 2009 will really be flattish, as fourth-quarter consensus earnings per share implies.”

Late Wednesday, Hot Topic Inc. reported its August comps fell 8.1 percent, with the namesake division’s 8.6 percent drop tempered by a 5.7 percent decline at its Torrid division. Zumiez Inc. said its August comps dropped 12.1 percent.

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