Retailers Post Solid Sales Gains

U.S. shoppers persevered at stores and malls in August, continuing to spend despite soaring gasoline prices and giving many of the nation’s biggest retailers surprisingly solid sales, according to figures reported Thursday.

But the outlook for coming months was uncertain, with Hurricane Katrina and higher energy prices expected to take a toll on the overall economy.

A diverse group of retailers enjoyed strong results, including warehouse club Costco Wholesale Corp., teen retailer Wet Seal Inc., moderate-priced department stores J.C. Penney Co. and Kohl’s Corp. and upscale merchants led by Nordstrom Inc.

The International Council of Shopping Centers-UBS sales tally of retailers rose 3.6% in August, missing an expected 4%. The survey is based on same-store sales, or results at locations open at least a year, a key measure of a retailer’s health.

The teen sector fared particularly well during this back-to-school season. Wet Seal posted a 48.3% increase in same-store sales; American Eagle Outfitters Inc. and Abercrombie & Fitch Co. earlier reported gains of 11.8% and 24%, respectively.

Wal-Mart Stores Inc.’s same-store sales rose 3.3%, slightly below analysts’ estimates, as low-income shoppers continued to feel the sting of higher energy costs. The retailer also warned that the hurricane’s effects could weaken sales this month.

There were some exceptions to August’s upbeat results, notably Limited Brands Inc. and Gap Inc., which reported same-store sales declines of 3% and 9%, respectively, as they struggle to find the right merchandise mix.

Analysts were generally encouraged by the overall tone of business.

“I am a little surprised about the strength,” said Ken Perkins, president of RetailMetrics of Swampscott, Mass. “This was a difficult month, given the hot weather and the psychological and financial impact of rising energy prices.”

He noted that 68% of the retailers that reported August results beat analysts’ modest expectations.

But Michael Niemira, chief economist at the International Council of Shopping Centers, was more cautious, noting that the August gains were on top of tepid results a year ago, when shoppers cut back their spending amid growing worries about the economy.

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Back to school

Year-over-year percentage change in August sales at stores open at least a year

*--* Company % change Wet Seal +48.3% Bebe +17.0 Ross +13.0 Nordstrom +9.0 Guess +6.4 Target +6.3 Wal-Mart +3.3 J.C. Penney +2.8 Pacific Sunwear +2.6 Federated +1.1 May -2.8 Limited Brands -3.0 Hot Topic -7.1 Gap -9.0 Sharper Image -14.0

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Sources: Times wire services, company reports