Back-to-School Sales Disappoint

Sluggish back-to-school sales--blamed on a wobbly economy, weird weather and too few fashion must-haves--are draining hopes that apparel retailers will make a big comeback in the second half of the year.

Chain store sales rose just 1.8% last week, the slowest year-over-year gain since Jan. 5, according to a report released Tuesday by Bank of Tokyo-Mitsubishi Ltd. Compared with the previous week, sales dropped a hefty 0.8%.

Disappointing numbers are dribbling in from some of retail’s biggest players, including Federated Department Stores Inc., Sears Roebuck & Co. and even industry giant Wal-Mart Stores Inc.

“The economy is very bumpy ... and there’s a lot of uncertainty over all the turbulence in the stock market,” said Michael Baker, research director for the International Council of Shopping Centers in New York. “Consumers are playing wait-and-see at the moment.”

Economic uncertainty also has caused retailers to keep inventories lean, which helps profits but makes it less probable that companies can boost sales later by marking down excess merchandise as they did last year, Baker said.

“Under those circumstances, you’re not going to see a rapid pick-up in sales,” Baker said. “This is something that is going to carry through into the holiday season, I’m afraid.”

Weather is taking part of the blame. Unusually sultry temperatures, especially in the New England states, have made it hard for consumers to get interested in fall fashions, the Bank of Tokyo-Mitsubishi report said. In some areas of the nation, there was more rain than usual last week, including in the central states that stretch from Mexico to Canada. Along the Southern California coast, surf shops, which are increasingly reliant on back-to-school sales, are coping with unseasonable mist and drizzle.

“It rained yesterday,” Huntington Surf & Sport owner Aaron Pai said. “This time of the year, it just shuts everything down.”

But buyers turned out last weekend for the Huntington Beach company’s back-to-school sale, Pai said, boosting sales about 2% for the annual three-day event.

A lack of fashion freshness also is playing a part in the sluggish back-to-school sales, some experts say. Low-rise pants have sparked sales for women, and some companies hope that the style also will catch on for men. But some retailers remain skeptical that males will warm to the slinkier look.

What teen apparel retailers long for is a shift in the fashion silhouette that would create a gaping hole in the closets of teens, which they would then have to fill, said Tim Harmon, president of Pacific Sunwear of California Inc., an Anaheim retailer that caters to surfers and skateboarders.

“We are hoping, like everybody, to find a new driver in the men’s business,” he said. “All of our competitors are looking for a new trend for all of us to capitalize on.”

Thus far, strong sellers at PacSun stores include jeans, striped knit shirts and hooded sweatshirts and sweaters.

In other gloomy retail news released Tuesday, Instinet’s Redbook Retail Sales Average slipped 1.5% in the two weeks ended Aug. 17 compared with the same period in the previous month. With only one or two exceptions, Redbook’s entire retail group reported slower-than-expected sales for the first half of August. J.C. Penney Co. offered a bright spot, saying sales so far in August were tracking above expectations.

“Back-to-school sales generally have lagged plan,” Redbook researchers reported. “Given the current economic conditions, parents are more cautious about spending. Kids are taking a more value-oriented approach to their back-to-school shopping rather than feeling the need to capture the latest trend.”

But even some high-profile discounters have lost some steam recently. Wal-Mart, the world’s biggest retailer and usually among its best performers, said Monday that August probably would be at the lower end of its plan for 4% to 6% same-store sales growth.

Federated Department Stores Inc., parent of Bloomingdale’s and Macy’s, among others, said sales for the first two weeks of August were “very disappointing.” The company already had revised its expectation for the month, saying sales would be in the 1% to 3% growth range rather than the 3% to 3.5% the company previously had forecast.

Sears also said sales were slower than expected for the second week of August. The company had anticipated a sales decline of close to 10%.

For their fiscal second quarter, some retailers offered relatively brighter news Tuesday.

Gadzooks Inc., which sells clothes and accessories to teens, reported earnings of $115,000, or a penny a share, for the quarter ended Aug. 3, contrasted with a loss of $1.3 million, or 14 cents, in the comparable period last year. The company’s sales rose 5.6% to $76.7 million. Sales at stores open a year or more, a key industry indicator, declined 3.3%, compared with a decrease of 8.9% in the second quarter last year.

Aeropostale Inc., another retailer that caters to teens, reported Tuesday a loss of almost $2 million, or 6 cents a share, for the quarter ended Aug. 3, compared with a loss of about $1.7 million, or 6 cents, a year earlier. The New York-based firm also said its sales jumped 41% to $90.1 million as it netted 83 store openings. Same-store sales rose 11.2% in the quarter.