Big retail chains see sales rise in July

Shoppers temporarily put aside their worries about the economy and hit the malls in July, handing retailers a healthy start to their crucialback-to-schoolseason.

With many schools in Los Angeles and Orange counties starting in just a few weeks, stores are already stocking shelves with binders, shoes and trendy clothes geared for kids heading back to the classroom. Retail analysts are cautiously optimistic that parents will shell out a bit more for Junior this year.

Major chain stores posted a robust 4.3% sales increase in July compared with the same month a year earlier, well above analysts’ expectations of a 1.5% rise, according to Thomson Reuters’ survey of 19 retailers.

At the Westfield mall in Culver City, Treslyn Williams of Inglewood came armed Wednesday with coupons to “stretch a dollar” in order to completely outfit her 7-year-old grandson Donteo for elementary school.

Like many shoppers, the 52-year-old said she was keeping an eagle eye on her wallet, shopping earlier than ever to find the best deals and make the most of her $300 budget.

“He needs a book bag, pencils, paper, clothes and shoes,” said Williams, who directs a union for entertainment workers. “Times are tough for me. I have to watch every nickel and penny. You have to shop for bargains, you have to find ways to stretch, like buying clothes one size larger so it lasts longer.”

Analysts say that many consumers were drawn to stores last month by hot weather and heavy promotions as stores cleared out summer merchandise to make room for fall andback-to-schoolitems. July is typically a transitional month that’s often slow, but one that retailers carefully watch for signs of consumer spending beforeback-to-schoolshopping begins in earnest.

“The word that best summarizes the July performance is ‘encouraging,’ ” said Michael Niemira, chief economist for the International Council of Shopping Centers. “After three months of soft sales that mirrored the broader economy, that now seems to be giving way to a little bit stronger performance.”

Signs are pointing to a healthy uptick in spending. After cutting back in 2011, parents with kindergarten to high school-age children said they expected to shell out an average of $688.62 for back-to-schoolitems, up 14% from last year, according to a National Retail Federation survey.

In July, top performers were a mixed group. Limited Brands Inc., parent company ofVictoria’s Secretand Bath & Body Works, led the way with a 12% increase. Discounters performed well, with off-price retailersRoss Stores Inc.andTJX Cos.both reporting a strong 7% increase andCostco Wholesale Corp.seeing sales rise 5%.Macy’sInc. posted a 4.1% increase.

Gap Inc.blew past expectations with a 10% jump. The San Francisco retailer, which has struggled in recent years and moved to close nearly 200 stores last fall, has recently seen its sales perk up with a fresh assortment of trendy apparel. Its Old Navy, Banana Republic and Gap brands all reported growth last month.

Other retailers did not fare as well. Struggling teen clothierWet Seal Inc.said sales fell 15.6%, while theBuckle Inc., which caters to young men and women, reported a 0.1% drop.

Results are based on sales at stores open at least a year, known as same-store sales and considered an important measure of a retailer’s health because it excludes the effect of stores’ openings and closings. Only about 13% of the nations’ retailers participate in the Thomson Reuters survey, but it remains a closely watched gauge of consumer sentiment and the broader economy.

Retailers are beginning to feel the lift provided by theback-to-schoolseason, which began last month and is typically the second-largest sales driver of the year (after the year-end holidays), accounting for more than 10% of the industry’s annual sales, analysts said. Unlike in the holiday season, many parents view buying clothes for growing kids and maturing teenagers as more of a necessity than a splurge.

“It’s more need-based purchasing, which has usually boded well forback-to-schoolshopping,” said Ken Perkins of Retail Metrics Inc. “But in the past few years, kids were still going back to school in the same clothing, the same backpack, and there wasn’t a desire to buy new.”

Perkins said that pent-up demand may be driving families to pick up basic items of clothing and fashionable pieces, especially the brightly colored and patterned denim that has caught on as the hot trend for summer going into fall.

“It’s a popular trend and grabs teen and drives sales, which is something the previous few seasons didn’t have,” Perkins said.

Other retail experts speculated that many bargain-hungry consumers will wait until September, when items go on sale, before really polishing off shopping lists.

“One question is — was July so good simply because of all the end-of-season clearance and promotional prices?” economist Niemira said. “If that is the case, then we may still see a rather soft August, while consumers wait for the clearance in the beginning of September.”

That’s the game plan for Joanne Hill. The 37-year-old veterinary technician said she’s waiting until stores start slashing prices in a month or so before buying new clothes for her children.

“We have to watch what we spend,” the South Los Angeles resident said. “My kids need new shoes and socks, but the economy isn’t great right now.”

shanli@latimes.com