Retail sales rise a modest 2.9% at major chains
The crucial back-to-school season got off to a slow start last month as retailers hoping for brisk sales of clothes, backpacks and school supplies saw tepid business and continued consumer frugality.
“The days of buying merchandise well before school starts are gone now. Kids would rather wait to see what the cool brands and styles are … and parents would rather put off spending until their kids will actually wear what they buy,” said Marshal Cohen, chief industry analyst at market research firm NPD Group.
“Don’t mark the back-to-school shopping season absent this year — it will just be a little tardy.”
Major chain stores reported that sales rose a modest 2.9% in July compared with a year earlier, according to Thomson Reuters’ tally of 28 retailers.
That was lower than the 3.1% increase analysts had predicted and marked the fourth straight month that results either missed or came in at the low end of expectations, said Michael Niemira, chief economist at the International Council of Shopping Centers.
“It’s a very narrow set of stores that are doing very well,” he said. “We’re still digging our way out of this recessionary hole.”
July’s sales results came on the eve of the grand reopening of Santa Monica Place, which will open to the public Friday after two years of construction.
The three-story, open-air shopping center has a decidedly upscale slant, anchored by Bloomingdale’s and Nordstrom department stores.
But executives at mall operator Macerich, which owns the shopping center and spent $265 million on the makeover, say they’re not worried about attracting shoppers. At a preview event for the mall Tuesday, Art Coppola, chief executive of Macerich, said he expected the property to be a huge draw for Westside residents and international tourists.
“It’s up to me to provide an environment that attracts the consumer.... I think we’ve created that environment,” he said. “Yeah, I’m worried about the consumer, but not here.”
Retailers blamed last month’s weakness on poor economic conditions and hot weather, which may have kept some shoppers at the beach. An excess of discounts aimed at clearing out summer merchandise didn’t do much to entice shoppers to spend.
In a poor sign for the back-to-school season, teen retailers were a big drag on the retail industry, with Hot Topic Inc. posting a 9% sales decline, Wet Seal Inc. reporting a 4.3% drop and American Eagle Outfitters Inc. seeing flat sales.
Even Aeropostale Inc., a relative bright spot in the weak teen sector in recent months thanks to lower prices than many of its competitors, struggled: The chain posted a 1% increase, worse than the 7.1% rise that analysts had expected.
Analysts said July’s quiet sales may have been due to parents procrastinating while they hunt for the best deals, which could benefit retailers in late August and early September.
Nancy Baker recently started shopping for back-to-school items for her 13-year-old daughter, Azuree, heading to a Target in West Hollywood this week to pick up notebooks and binders for the rising eighth grader. But she said the trip was more “out of necessity” than a splurge on the latest school must-haves.
“Money has been tight, so we have been very careful,” she said. “In fact, I haven’t taken her school shopping in a couple of years. She’s been wearing her old clothes and some of my old clothes.”
After two lackluster back-to-school seasons, retailers said they’re counting on this year’s to help pull them out of a prolonged slump. Parents have indicated in recent surveys that they’re ready to spend again, albeit cautiously, on school items.
A recent survey by the National Retail Federation said the average U.S. family with students in kindergarten through high school will spend $606.40 on clothes, shoes, supplies and electronics, a 10.5% rise from $548.72 a year earlier.
After starting a new job a few months ago, Hali Klonel, 49, said she was feeling more confident and planned to spend about $500 on back-to-school gear for her 7-year-old daughter, Kira.
“Last year, it was like one outfit here, one outfit there. This year, we’ll do half a dozen things in one day,” Klonel said while shopping at Target this week. “I just think things are a little better in general.”
To woo young shoppers and their parents, retailers have stepped up their efforts, rolling out discounts and new exclusive lines and turning to social media to advertise. Aside from the holidays, back to school is considered the most important time of the year for the retail industry.
“We’re not counting on a lot of help from the economy, so it’s a market-share game,” said Mike Boylson, chief marketing officer at J.C. Penney Co., which reported that July sales fell 0.6%. “Even as business has gotten tough, they’re still shopping newness and they’re still shopping style.”
Wal-Mart Stores Inc. is slashing prices on Wrangler jeans, Sharpie markers, highlighters and calculators, spokeswoman Christi Gallagher said. The world’s largest retailer no longer reports sales on a monthly basis.
“There are indications that this will be a stronger year, but what I can tell you is our customers are still continuing to want to stretch their dollars as much as they possibly can,” she said. “It’s going to be a balancing act for them, financially and emotionally.”
All told, 61% of retailers missed expectations in July, Thomson Reuters said. Still, there were pockets of strength.
Sales rose 12.3% at luxury retailer Neiman Marcus, 12% at the Limited and 9.4% at action sports retailer Zumiez Inc. In the department store sector, Nordstrom Inc. saw sales increase 7.6% and Macy’s Inc. said sales rose 7.3%.
Results are based on sales at stores open at least a year, known as same-store sales and considered an important barometer of a retailer’s health because it excludes the effect of store openings and closings.
andrea.chang@latimes.com
