School helps lift sales at stores

The U.S. may be in the grips of a housing and credit market squeeze, but if your kid needs new jeans, he needs new jeans.

So back-to-school shoppers helped propel retail sales to $55.2 billion last month, with clothing stores that target teenagers posting strong results, according to the International Council of Shopping Centers’ tally of 47 major chains nationwide.

Sales at stores open at least a year were 2.9% higher than in August 2006. So-called same-store sales are considered a key barometer of a retailer’s health.

It was the strongest showing since March, though below the average monthly gain in each of the last three years and not as impressive as the 3.8% improvement in the year-earlier period.

Of the 45 retail chains monitored by Thomson Financial, 67% beat analysts’ expectations.

“August results show that despite how the economy is faring, the new semester happens every year and parents are budgeted for it,” said Jharonne Martis, a senior research analyst at Thomson.

The chief economist at the shopping center group, Michael Niemira, called the sales numbers “a bit reassuring” but cautioned that the pace in August wasn’t much better than it has been since consumer spending started slowing down in February. The average from that month through July is 2.3%.

“We’re not out of the woods yet,” Niemira said. “I think the consumer faces a lot of problems still from the housing market weakness that will not go away any time soon.”

Back-to-school shopping continues in September, when many students return to class and realize what they should have bought. Niemira predicted that sales would rise 2.5% this month.

In August, almost all the major teen apparel retailers surpassed expectations, including Zumiez Inc., American Eagle Outfitters Inc. and Abercrombie & Fitch Co.

Anaheim-based Pacific Sunwear of California Inc. logged a 9.6% gain, compared with analysts’ predictions that the skate and surf wear maker would see only a 0.9% rise.

Even struggling Gap Inc., the San Francisco-based parent of 3,100 Gap, Old Navy and Banana Republic stores, slipped past expectations with its 1% sales decline.

High-end retailers continued to shine, especially Saks Inc., which recorded an 18.2% jump.

It was also a good month for discounters such as Wal-Mart Stores Inc. and Target Corp., which saw gains of 3.1% and 6.1%, respectively, both better than Wall Street had expected. Wal-Mart said it rang up solid sales in children’s apparel, school supplies and electronics including laptops and calculators.

At the same time, wholesale clubs such as Costco Wholesale Corp. and BJs Wholesale Club Inc. collectively posted their weakest performance since January and department stores rose a wimpy 0.5% as a group.

A later-than-usual start of the school year in many states helped plump sales for some retailers. And many fanned sales by slashing prices, which can erode profits.

So what did August tell the experts about what to expect during the all-important holiday season?

“The message,” Niemira said, “is price will matter.”

leslie.earnest@latimes.com