Major U.S. retailers are expected to
post softer August sales as consumers spent less on
back-to-school items, with the results helping to set analysts'
expectations for the all-important holiday season.
Top retailers such as Wal-Mart Stores Inc (WMT.N), Target
Corp (TGT.N) and Gap (GPS.N) are due to report monthly sales
reports for stores open at least a year on Thursday.
Industry forecasters have taken a grim view of the period
overall, with the International Council of Shopping Centers
expecting back-to-school sales at chain stores to rise 1
percent this year, their smallest gain since 2001.
Analysts also expect retailers to report a 1 percent rise
in August sales at stores open at least a year, worse than a
3.1 percent gain a year ago, according to Thomson Reuters
research.
A handful of retailers including Kohl's and J.C. Penney,
issued same-store results on Wednesday, with each posting
declines that were smaller than expected, but highlighting an
overall trend of reduced spending.
"We're not seeing any indication that the consumer has more
money or feels better," Kohl's Chairman Larry Montgomery told a
Goldman Sachs retail conference.
Penney cited a difficult back-to-school season, and added
September same-store sales would likely fall in the mid- to
high-single digit percentages because of disruption from
hurricanes.
Retailers were pressured this year as higher fuel and food
costs, a housing slump, rising unemployment and tighter credit
have curbed consumers' discretionary income.
Some investors have bet the recent ease in oil prices would
alleviate pressure on consumers' budgets, but retail executives
have not embraced that view.
"While weather was a bright spot in August, we believe that
the slowing economy negatively impacted traffic and sales,"
said Deborah Weinswig, an analyst at Citi Investment Research.
WINNERS AND LOSERS
Discounters and off-price retailers such as and
Ross Stores (ROST.O) are expected to turn in a relatively
stronger performance as consumers looked for bargains.
Specialty retailers and department stores, which have been
challenged by weak clothing sales and declining mall traffic
all year, are expected to continue to struggle.
Teen stores are also expected to report weakness as
back-to-school sales, the second-largest sales period for
retailers, get pushed into September.
"While back-to-school marketing and promotions kicked off
in August, we see parents and teens putting off apparel
purchases until September, after school starts," Standard &
Poor's equity analysts said in a research note.
Wal-Mart, the retail leader, is expected to post a rise of
1.6 percent in August same-store sales, its growth slowing from
a 3.1 percent rise a year ago, according to Thomson Reuters.
On Wednesday, No. 1 U.S. warehouse club Costco Wholesale
Corp (COST.O) said its August same-store sales rose 9 percent
as shoppers stocked up on food and cheaper gasoline.
"The pace of economic activity has been slow in most
districts," the U.S. Federal Reserve said in its Beige Book
report on the state of the economy.
"Many described business conditions as 'weak,' 'soft,' or
'subdued,"' the Fed said in its anecdotal economic assessment,
compiled from reports by the 12 regional Federal Reserve banks.
The ICSC said holiday sales should also be their weakest
since 2001, predicting a rise of 3.6 percent compared with a
4.2 percent gain last year.
The National Retail Federation said it expects total U.S.
sales growth of 3.5 percent for 2008, compared with last year's
3.7 percent increase.
(Additional reporting by Sarah Coffey in New York, editing
by Leslie Gevirtz)
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