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Redbook average heats up in Aug.

Home goods a strong performer

Buoyed once again by stronger-than-expected sales at the nation's big discounters, offsetting continued weakness at department stores, retail same-store sales managed to exceed plan for a second week in a row, getting August off to a promising start, according to the widely watched Redbook Average.

Suggesting that retail sales may finally be gaining some traction — at least among mass merchants — sales also beat plan during the final week of July, getting a lift from Back-to-School and tax rebate checks. It was the first time in two years sales had actually surpassed expectations.

"Sales were mixed in the first week, but above plan overall," observed Redbook analyst Catlin Levis. With an increase of 4.7 percent, discounters beat a forecast of a 4.0 percent gain, driven, Levis noted, by low-margin consumables, especially food and some Back-to-School goods. But department stores remained weak, with sales slipping by 1.2 percent, worse than a projected drop of 0.6 percent. Breaking sales out by region, Levis said the Northeast and Midwest performed best during the week.

Levis said August was "somewhat transitional, characterized by final summer clearances and the shift in inventory to Back-to-School merchandise and fall apparel. Back-to-School is not expected to peak until September, but some retailers noticed a slowing of Back-to-School merchandise sales compared to the previous year. The slowdown may have been due to the hot weather and the growing trend of consumers purchasing Back-to-School clothing as they need them rather than ahead of time. Elsewhere, home-related merchandise from furnishings to hardware to appliances performed well."

Redbook Retail Sales Average
First week of August

Week ended 8/11 8/18 8/25 9/1 Month Target
*Including chain stores and traditional department stores.
Source: Redbook Retail Sales Average, a unit of Instinet, a Reuters company.
Department Stores* -1.2 -1.2 -0.6
Discounters 4.7 4.7 4.0
Redbook Average 2.4 2.4 2.2


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