Back-to-school shopping starts slowly

By Annalyn Censky, staff reporter


NEW YORK (CNNMoney.com) -- The back-to-school shopping season got off to a sluggish start in July, as retailers reported mixed sales for the month Thursday.

Consumers are continuing to keep tight control of their spending as the economic recovery tugs along at a slower pace than most analysts predicted earlier this year.

Thomson Reuters, which tracks monthly same-store sales for 28 chains including Macy's (M, Fortune 500), Costco (COST, Fortune 500), Target (TGT, Fortune 500) and J.C. Penney (JCP, Fortune 500), said sales were up 2.9%, just below the 3.1% growth expected by analysts.

July's numbers were a slight letdown for retailers after June brought a 3.1% increase in same-store sales -- a gauge of a retailer's performance that measures sales at stores open at least a year.

Although discounters and large department stores seemed to fare just "OK," teen stores presented "extremely weak" results, said Eric Beder, managing director of equity research at Brean Murray, Carret & Co.

"We have no real clear signal that the American consumer is becoming more aggressive in spending," he said. "These numbers should not provide a lot of confidence that we're going to see any sort of turnaround in the second half of the year."

Overall, 17 of the 28 stores reporting results missed analysts' expectations, 9 beat them and 2 met them.

The weaker-than-expected results came as the high unemployment rate drove shoppers to continue to procrastinate in search of the deepest discounts, said Jharonne Martis, Thomson Reuters' director of consumer research, who compiles the report.

"No matter how the economy is doing, back to school happens every year," Martis said. "Families are budgeting and they're going to buy the school supplies they need, but they're waiting until last minute to find the best deals."

Wholesale discounter Costco reported a 6% increase in sales, slightly higher than the 5.5% that had been expected. But rival discounters Target and BJ's Wholesale (BJ, Fortune 500) both fell short of estimates.

Teen stores The Buckle (BKE) and Hot Topic (HOTT) were two of the worst performers, reporting deep declines in sales for the month around 9%, and Wet Seal (WTSLA) said its sales dropped off 4%.

Thomson Reuters had expected declines from the teen stores during the month, but not to the extent actually reported.

Meanwhile, two other teen apparel chains - Zumiez (ZUMZ) and Abercrombie & Fitch (ANF) - surprised analysts with much stronger-than-expected sales.

Macy's, JW Nordstrom (JWN, Fortune 500) and Limited Brands (LTD, Fortune 500) were also among the top performers. To top of page

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