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Discounters, home drive Redbook

Nicole Crews, Don Hogsett -- Home Textiles Today, August 31, 2001

New York — Getting a helping hand from Back-to-School and sturdy sales of home goods, same-store sales for retailers across the nation advanced by 2.9 percent during the third week of August, once again coming in ahead of expectations and marking something of a turnaround in a retail business that's been running on fumes for most of the past 12 months.

Discounters, as they have for more than a year, sharply outpaced department stores, driving sales up by 5.0 percent during the week. But even the department store sector is trying hard at a comeback, and sales improved for a third straight week, declining by just 0.2 percent, compared to steeper drops of 0.3 percent the prior week and a deep 1.2 percent decline during the first week of August.

"Most companies in Redbook's sample are at or slightly ahead of their monthly sales plan," said Redbook analyst Catlin Levis. "Merchandise trends over the past week continued with the Back-to-School theme, focused on children's clothing, basic apparel and other school supplies. Back-to-School activity appears to be on target so far, although its impact will be easier to assess next month."

Retail sales were also boosted by a buoyant home store business, said Levis. "Several retailers noted that sales in home departments as well as electronics also showed strength. Many stores reported increases in customer traffic."

But sales gains could be coming at the expense of the bottom line, Levis observed. "Retailers are driving sales through price reductions, putting pressure on profit margins. Consumers continued to focus on more down-to-earth items such as food, household supplies, outdoor equipment, home goods, etc."

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