Discounters deliver small gain

Held back by suddenly weakening sales at the nation's big discounters in the aftermath of Hurricanes Bonnie and Charley, same-store retail sales edged up 1 percent during the third week of August, slowing from an increase of 2.3 percent the preceding week, the Johnson Redbook Index reported.

Taking the entire Redbook Index down for the week, sales at mass merchants hit the wall, limping up just 0.8 percent following stronger gains of 3.3 and 3.6 during the first two weeks of the month.

In a striking reversal of recent sales patterns, department stores outperformed their discounter peers, with sales jumping 1.3 percent, improving on a 0.3 percent increase the week before.

Measured on a month-over-month basis, sales fell 1 percent below July levels, coming in beneath a targeted decline of 0.4 percent.

Redbook Analyst Catlin Levis said, "The third week saw the largest performance shortfall so far this month. Sales were substantially below plan and the gap widened between actual results month-to-date and retailer expectations. Hurricanes Bonnie and Charley had a negative impact on sales overall. Some retailers also believe that a later Labor Day may be delaying back-to-school activity, and the fourth week of August is not expected to deviate substantially for that reason. The back-to-school impact will be easier to assess next month."

Impacting the back-to-school season, said Levis, "Consumers are postponing purchases closer to the time of actual need. Many kids want to see what other kids are wearing before they purchase clothing."

Meanwhile, added Levis, "The shift in buying patterns favored electronics such as laptop, MP3 players and digital cameras, while traditional back-to-school clothing categories under-performed. The week saw performances at department stores modestly improve, while key discount stores encountered more difficult selling conditions in some of their markets."

Johnson Redbook Retail Sales Index
Third week of August

Week ended 8/7 8/14 8/21 8/28 Month Target
Department stores* 1.0 0.3 1.3 0.9 1.0
Discounters 3.3 3.6 0.8 2.6 3.5
Redbook Index 2.4 2.3 1.0 1.0 2.5
*Including chain stores and traditional department stores.
Source: Johnson Redbook Index

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