Back-to-School Fuels Retail Profits
After worrying that the spending for the Back-to-School season would be late, retailers reported the annual shopping season arrived right on schedule.
U.S. chain-store sales increased 6 percent during August, the traditional month for Back-to-School shopping, said the International Council of Shopping Centers.
“Back-to-School spending was especially strong in August,” said Michael P. Niemira, chief economist for ICSC. “The August acceleration was propelled by numerous state sales-tax holidays and retailer promotions, which helped drive consumer traffic and sales.”
Back-to-School spending had been forecast to increase this year, according to a survey released in July from National Retail Federation and BIGinsight. More children were scheduled to enter elementary and middle school this fall. The average person with school-age children was forecast to spend $688.62 on Back-to-School, up from $603.63 in 2011.
Executives for Ross Stores Inc., Gap Inc. and Target Corp. specifically credited the Back-to-School season for making cash registers ring.
Target Chairman Gregg Steinhafel said Back-to-School lifted the discounter’s sales close to the high end of its guidance. “Sales were stronger in the second half of the month, as guests responded to Target’s broad assortment and compelling value for their Back-to-School and back-to-college shopping,” Steinhafel said.
Retailers reported good sales across the board. Discounters and off-pricers did particularly well with Target reporting a same-store-sales increase of 4.2 percent and Ross Stores and TJX both announcing same-store-sales increases of 8 percent.
Department stores showed healthy same-store-sales increases, but Seattle-based Nordstrom Inc. reported a skyrocketing same-store-sales increase of 21 percent. The giant increase was fueled by the “Anniversary Sale” event. It is the retailer’s biggest sale of the year, and eight days of the event were held in August. (The rest were scheduled in July.)
Specialty stores posted solid results except for The Wet Seal Inc., which reported a plummeting decline of 18.5 percent. The Foothill Ranch, Calif.–based company ousted its chief executive officer, Susan McGalla, last month, and the retailer might be preparing for a proxy fight. One of its major stockholders, Clinton Group Inc., filed papers with the Securities and Exchange Commission to remove four members from the retailer’s board of directors.
—Andrew Asch
