"ICSC Research estimates that the later back-to-school selling trimmed about 0.5 percentage points from July's sales pace and will boost August by that same magnitude," wrote Michael Niemira, ICSC chief economist and director of research.
Tighter inventory controls were a factor, noted Lorraine Hutchison, specialty retail and department store analyst for Bank of America/Merrill Lynch in a conference call. Old Navy's sales were weaker, in part because of a lack of merchandise.
"They had such a successful spring and early summer, they were light on inventory," Hutchinson said. JCPenney and Bon Ton also cited lower clearance inventory levels for their showings--down 12.3% and 9.8%, respectively. Weather, too, was a factor, with July's average temperatures running about 2 degrees cooler than last year, ICSC noted.
Drug store sales were the only sector to report a gain in the ICSC Index, with comps rising 1.3%. Apparel stores comps declined 7.1%--with Abercrombie & Fitch reporting a 28% comp drop; Ross Stores reported a 4% gain--while department stores fell 9.6%. Luxury stores reported a 12.5% decline. Discounters reported a 4.1% drop, with Target posting a 6.5% decrease and TJX a 4% gain.
"Continued weakness in apparel and home décor categories remains at the root of Target's sales challenge, though the retailer described its results as 'within expectations'," wrote Bryan Gildenberg, chief knowledge officer of MVI, a Cambridge, MA-based retail consultancy.
Wholesale clubs dropped 1.5% when fuel is excluded. Food deflation was a major factor at the warehouse clubs, as traffic remained healthy, said Robert Ohms, discount stores, apparel and footwear analyst at BOA/Merrill.
Don't expect a major shift anytime soon, MVI warns. Consumers remain concerned about unemployment and are maintaining a higher savings rate of about 5%. The result will be "a rocky next few months for retailer performance," Goldenberg wrote.
"The consumer in any way shape or form wants value," said Adam Rifkin, hardlines analyst of BOA/Merrill. "Things are certainly getting better compared to where they were six to nine months ago. But less bad is not necessarily good."Despite help from back-to-school shopping, ICSC Research anticipates an August comp-store decline of about 4% versus last year
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