NEW YORK - Retailers on Thursday posted sales declines for August as shoppers held back on back-to-school purchases and continued to focus on necessities, raising further concern about the upcoming holiday season.
Early reports showed 11 retailers missed analyst expectations, while 10 exceeded estimates, according to a poll by Thomson Reuters. The winners were mainly discounters, while more upscale chains fared worse.
"It really was all about value and price proposition here," said Ken Perkins, president of retail consulting firm Retail Metrics. "If you're off-price or discount-oriented and conscious of price points you fared very well in August."
There have been some signs of a stabilizing economy. On Tuesday, the U.S. manufacturing sector grew in August for the first time in 19 months. Also, a gauge of future U.S. home sales rose more than expected in July to the highest point in more than two years.
But any recovery will have to include an uptick in consumer spending, because it accounts for about 70 per cent of economic activity. Thursday's results showed continued widespread sales declines.
Perkins expects sales in stores open at least a year to fall 3.4 per cent in August, not as bad as July's 4.7 per cent drop.
August is expected to be the 12th consecutive month of declines in the measurement, considered important for retailers because it removes the effects of expansion.
Discounter Target Corp. said sales at established stores dropped 2.9 per cent, much better than the 5.1 per cent drop analysts expected. Health care products were strong sellers, while apparel and home products were weaker.
Meanwhile, warehouse club operators Costco Wholesale Corp. and BJ's Wholesale Club Inc. both reported results fell but also beat analyst expectations. Food remains a bestseller and the clubs while apparel and jewelry were weaker.
TJX Cos., which operates discount chains TJMaxx and Marshall's, said its 5 per cent increase topped expectations as consumers hunted for bargains.
Upscale retailers meanwhile reported a weak month. Saks Inc. said results dropped more than analysts expected and Nordstrom Inc. said sales in stores open at least a year fell 7.6 per cent, although analysts predicted a steeper drop.
The teen sector was weak as back-to-school sales failed to take off. Hot Topic Inc. sales in stores open at least a year fell 8.1 per cent, a bigger drop than the 6.9 per cent predicted by analysts.
The Buckle Inc., typically an outperformer, said results rose but missed analyst expectations. Meanwhile, Zumiez Inc. and Wet Seal Inc. also reported results dropped but did better than analysts predicted.
Aeropostale Inc., which has outperformed competitors by focusing on low prices, said results rose more than analysts predicted. Meanwhile, Abercrombie&Fitch Co., which has kept prices relatively high, reported a 29 per cent drop, bigger than expected.
Labour Day falls a week later this year, so some back-to-school buys are likely to come later. However, the shift of the sales-tax holidays from July to August in most of the 14 states that have them partly offset the later Labour Day.
Limited Brands Inc., which operates Bath and Body Works and Victoria's Secret, said sales in stores open at least a year fell 4 per cent, but that beat the 5.9 per cent drop analysts expected.
Gap Inc. also said results fell but came in above expectations, boosted by sales at its low-priced Old Navy chain.
Department stores remained a weak sector. Macy's Inc. said sales at established stores dropped 8.1 per cent in August, a larger decline than analysts predicted.