Retailers report mixed back-to-school season

NEW YORK -- This year's back-to-school season isn't as big a bust for retailers as they feared -- or as last year's -- but it's not great either.

Americans are spending only when the item and price are just right, according to August reports that major chains released Thursday. And analysts expect stores will need to keep discounting to keep shoppers spending this fall and in the holiday season while they grapple with job worries and tight credit.

"It's a glimmer of hope that the numbers are coming in ahead of low expectations," said Ken Perkins, president of research firm RetailMetrics. "But the back-to-school shopping season isn't anything to get excited about. It means that Santa may not be dumping a huge lump of coal, but it sets up a very promotional holiday season."

Retailers that cautiously primed for a comeback five months ago as sales improved have been scaling back their hopes and making some tweaks to their merchandise again, analysts said.

And stores will face more difficult comparisons starting this month because consumer spending had started rising by last September.

But Thursday's reports helped ease fears of another double dip recession, which have been stoked in recent weeks by a barrage of negative economic reports, i ncluding slumping home sales.

The International Council of Shopping Centers said Thursday that its index of 31 major retailers rose 3.2 percent for August. That's a tad better than the 3 percent forecast but it barely compensates for a 2.0 percent drop a year ago.

For most of the stores releasing comparisons, they cover the four weeks that ended Aug. 28. Back-to-school shopping stretches from late July through mid-September.

Among the big winners were Costco Wholesale Corp., Victoria's Secret operator Limited Brands Inc. and Macy's Inc., whose results beat Wall Street forecasts.

Target Corp.'s results came in slightly below expectations, and chains that cater to teenagers had mixed results. Luxury retailers, which have been holding up much better, were mixed as some affluent shoppers are spooked by the wild swings in the stock market; Nordstrom Inc. fared well but Saks Inc. had tepid gains.

Steve Koenig, director of industry analysis for the Consumer Electronics Association, said spending on overall back-to-school electronics showed "marginal improvement" over last year, which was a low point.

Wal-Mart Stores Inc. no longer reports monthly.

Revenue at stores open at least a year is considered a key measure of a retailer's health.

Spending on nonessentials such as fashion remains below 2008 and closer to the level of five years ago, according to MasterCard Advisors' SpendingPulse, which tracks transactions in all forms including checks and cash.

August's figures continue a trend that began in April of shoppers holding back; it's expected to continue at least through December.

That frugality -- after stores saw a surprise uptick at the holidays and through March -- has meant an uneven recovery for retailers at the high end, as well as the low and middle.

John Gerzema, chief insights officer of Young & Rubicam and author of the book "Spend Shift," said Americans are moving "from mindless to mindful consumption."

"They're separating needs from wants," he said, adding, "Now, consumers are in an environment that is continuous turbulence that could be a fact of life for a few years."

Retail in detail

A comparison of August revenue, this year and last, at stores in selected chains that have been open at least a year.

The comparison is a key indicator of a retailer's health because it excludes the effects of expansion and stores closing during the year. Most of the chains that release this data compared the four weeks that ended Aug. 28 with the similar period a year earlier, though Costco's 2010 period ended Aug. 29, and Rite-Aid compared five weeks instead of four. Walgreen Co. plans to report its figures today.

Discounters

--BJ's Wholesale Club, up 2.4% (1.9% excluding gas sales)

--Costco, up 7% (5%, excluding currency and gas fluctuations)

--Target, up 1.8%

Drugstores

--Rite Aid, down 2.2%

Department stores

--Dillard's, unchanged

--J.C. Penney, up 2.3%

--Kohl, up 4.5%

--Saks, up 1%

--Stage Stores, up 0.5%

Clothing stores

--Abercrombie & Fitch, up 6%

--Aeropostale, down 1%

--American Eagle, up 1%

--Cato Corp., up 2%

--Gap Inc., unchanged

--Limited Brands, up 10%

--Ross Stores, up 5%

--Stein Mart, up 8.5%

--TJX Cos., up 2%

--Wet Seal, up 1.1%