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Back-to-School starts slow for retailers

With consumers holding on tight to their cash and buying closer to the vest, then frazzled by unseasonably warm weather across much of the country, same-store sales slipped by 0.2 percent during the second week of August, giving back some of the gains rung up the week before when sales climbed by 0.8 percent over month-before levels, according to the Redbook Retail Sales Average.

Stung by a slow start to the big Back-to-School season, and falling well behind plan, same-store sales for the two weeks month-to-date fell by 1.5 percent from July levels, far steeper than a forecast decline of 0.4 percent.

Stacked up against the same time-frame last year, sales for the first two weeks of August edged up by just 0.3 percent, well behind a forecast increase of 1.5 percent.

"With one or two exceptions," said Redbook analyst Catlin Levis, retailers in the Redbook sample reported results below expectations. "Most appeared to be at the lower end of their monthly targets for the first two weeks," Levis reported.

"Retailers struggled to find reasons for the demonstrably softer tone of the week. The weather was cited as warm weather over much of the country reportedly depressed demand for fall apparel," said Levis.

"Moreover, some discount stores which are heavily weighted in the index attributed their slowdown to the effects of the payroll cycle and thus reported smaller weekly gains," Levis added. "Consumers are increasingly buying closer to need."

Posing a big question mark, said Levis, "Back-to-School sales generally have lagged plan, but for the most part it is still too early to tell how consumers are reacting to them. Given the current economic conditions, parents are more cautious about spending. Kids are taking a more value-oriented approach in their back-to-school shopping rather than feeling the need to capture the latest trend. This paradigm obviously continues to favor discounters."

Redbook Retail Sales Average
Second week of August

Week ended 8/10 8/17 8/24 8/31 Month Target
*Including chain stores and traditional department stores.
Source: Redbook Retail Sales Average, a unit of Instinet, a Reuters company.
Department Stores* -4.5 -5.2 -4.9 -3.4
Discounters 4.4 3.1 3.8 4.6
Redbook Average 0.8 -0.2 0.3 1.5


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