• Andrea Lillo

Back-to-School fails to boost retail sales

New York — The unusually warm weather and uncertain economy kept consumers out of the stores in August, resulting in a disappointing Back-to-School season for most retailers.

Some retailers noted that their sales were affected by more conservative inventories and less clearance merchandise than in the prior year.

Besides the warm weather, Wal-Mart said that last year's strong comparable sales resulted in the low end of the 4 percent to 6 percent range for the company. The company grew its sales by 11.1 percent this month, to $18.37 billion, and company comps were at 3.8 percent. Comp-store sales at the Wal-Mart division were 4.3 percent, and at Sam's Club, 1.1 percent. The international division climbed 11.8 percent to $3.02 billion.

Wal-Mart added that the consumer continues to buy based on need, and steady traffic accounted for the majority of the sales increase, as it has over the past few months.

Target Corp. also experienced a difficult month. "Sales for the corporation were below plan for the month of August," said Bob Ulrich, chairman and ceo. Comps declined by 0.1 percent for the entire company, 2.5 percent at Mervyn's and 3.5 percent at Marshall Field's, while comps inched up 0.5 percent at Target Stores. Inventories at all the divisions remained in very good condition at the end of August, the company said. In addition, home was one of the strongest performers at Mervyn's for the month.

Sears' comps declined as well — by 11.1 percent — as it continues to implement its ongoing store level projects.

"Our strategic initiatives are progressing well and continue to deliver operating income improvement," said Alan Lacy, chairman and ceo.

Federated Department Stores also saw August comps fall by 5.8 percent. "We obviously were disappointed with our August sales performance," said James Zimmerman, chairman and ceo. "However, we did see some improvement in the sales trends during the last two weeks of the month."

TJX said that sales picked up during the latter part of the month as the weather moderated. At the MarMaxx division, comps were up 1.0 percent, which was within the targeted range. The home categories for this division saw comps step up 7.0 percent. In addition, the average per store inventory, including the warehouses, was down 10.0 percent. HomeGoods saw a 3.0 percent comp store increase, and TJX continues to be pleased with this format, seeing accelerated inventory turns, improved merchandise margins and an "exciting and constantly changing assortment."

TJX's Winners division had comps increase 5.0 percent, and TKMaxx's comps grew 12.0 percent. With a comp increase of 3.0 percent, the A.J. Wright format saw its Back-to-School business particularly affected by the warm weather, though it came back toward the end of August. All of the divisions' inventories are in excellent shape, the company added.

Ross Stores achieved strong sales for the month. "We are very encouraged by our performance in August," said Michael Balmuth, vice chairman and ceo. "The 6.0 percent increase in same-store sales for the month was significantly ahead of plan and on top of a 9.0 percent gain in the prior year." The retailer also noted that the home businesses remained standout performers, with same-store sales increases in the low teens.

Saks Inc., with company comps declining 3.3 percent, said that the month's performance reflected the lower levels of clearance merchandise than it had in the prior year. In addition, the home category was one of the best performing groups at the Saks Department Store Group.

Both total sales and comps slipped at department store Dillard's, dropping 3.6 percent and 3.0 percent, respectively. In addition, the retailer said that comps for the home and men's apparel categories each fell by 5.0 percent.

Family Dollar noted that its sales were adversely impacted by the elimination of an advertising circular that was distributed at the end of July and beginning of August last year. The company has been more conservative in its seasonal and apparel purchasing, it said, as inventory levels have been lower for seasonal merchandise. Additionally, there was less clearance merchandise in the July and August months this year compared to last year.

Jo-Ann Fabrics experienced a strong same-store sales performance, partially aided by the running of the end-of-the-season sale in August. However, though seasonal markdowns drove strong sales, they negatively impacted the gross margin rate.

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