August '07: Back-to-School Pushes Retailers to Head of Class
Back-to-School sales gave retailers a boost during August, but will the good business last through the holidays?
According to Michael Niemira, chief economist for the New York–based International Council of Shopping Centers, August’s gains may not have long legs.“In August, sales picked up a tad, but clearly the economic environment remains challenging for retailers,” Niemira said. “With continuing housing-market problems, consumer-spending trends will likely remain subdued in the foreseeable future.”
Niemira’s forecast may lock horns with the retail truism that a good Back-to-School season will pave the road for a good Holiday season. However, Jeffrey Van Sinderen, a retail analyst for Los Angeles–based financial-services firm B. Riley & Associates, also said business in the upcoming months may be soft.“The question for Back-to-School retailers is how business will be in September and October. Are we going to go back to business being slower? My guess is that the answer is yes,” Van Sinderen said.
August retail sales grew 2.9 percent compared with the same time in the previous year, according to the ICSC’s index of 47 chain stores. Same-store sales for specialty apparel stores increased by 1.9 percent in August. It was the sector’s strongest performance since March.Teen retailers Hot Topic and Pacific Sunwear both beat their forecasts in August. The long-suffering Hot Topic reported a decline of only 1 percent. Its business in rock T-shirts has reportedly been improving, Van Sinderen said.
After spending much of the year reporting declines, Pacific Sunwear posted a 9.6 percent increase in same-store sales for August. According to Van Sinderen, the girls’ business of the Anaheim, Calif.–based company increased 40 percent. —Andrew Asch
