Back-to-School SHopping Aids Many Retailers

Sales at stores open at least a year rose 4.4 percent on average from August 2010, according to a Thomson Reuters tally of 23 retailers. That was 0.2 percentage points below what analysts had expected, but still a good result.

“It bodes well for the balance of the year — the consumer has shaken off the craziness of Wall Street and the negativity coming out of Washington, and they’re buying,” said Madison Riley, managing director at Kurt Salmon, a retail consulting firm.

The companies with the biggest increases represented pretty much every retailing sector. BJ’s Wholesale and Costco, both warehouse stores, posted same-store sales increases of 11.5 percent and 11 percent. Limited, a consistently good performer because of its Victoria’s Secret division, was also up 11 percent. The teenage-oriented store chain The Buckle was up 8.3 percent, while Nordstrom rose 6.7 percent.

All five were also the biggest upside surprises, beating analyst estimates by the biggest margins among the stores reporting.

On the downside, Kohl’s and J.C. Penney, which have been promoting back-to-school shopping heavily, continued to have sales trouble. Both retailers posted same-store sales declines of 1.9 percent; analysts had expected increases of 1.6 percent and 0.8 percent, respectively.

Earlier in the summer, analysts were predicting that back-to-school shoppers would postpone purchases to September as they waited for deals. But at most retailers, that did not seem to be the case.

“Part of the dynamic we see here is consumers had held off on a fair amount of spending in the last 18 months due to the economic situation. It’s pent-up demand, and it’s an important part of the retail year,” Mr. Riley said. “I don’t think they’ve put it off, I think they’ve gone ahead.”

MasterCard Advisors’ SpendingPulse, which tracks spending at the retail level, said sales in back-to-school categories increased 3 percent in both July and August. “This is the best back-to-school season we’ve seen in terms of growth since 2006,” said Michael McNamara, vice president of research and analysis for SpendingPulse.

While luxury spending is usually correlated with the stock market over the long term, that is not always the case over the short term, as August showed.

In addition to Nordstrom’s gain, Saks Fifth Avenue’s same-store sales rose 6.1 percent. SpendingPulse did not release a percent increase for luxury spending this month because of changes in how it reports data, but “the luxury trend throughout the summer has been one of the leading areas, and it continues to be through August,“ Mr. McNamara said.

Still, analysts said that some lower-end stores have raised prices because of cotton and other materials increasing in cost, but are having trouble getting shoppers to pay more.

“Thus far in the season, promotions appear to be deeper than last year, and inventory levels across the sector are growing faster than sales, which bodes poorly for successful price increases,” Adrienne Tennant, an analyst at Janney Capital Markets who covers apparel stores, wrote in a note to clients earlier this week.

Hurricane Irene, which caused stores to close and shoppers to stay at home along the East Coast last weekend, seemed to have a light impact on sales. The retailers that quantified the impact of Irene on same-store sales said it had hurt sales by 0.6 percent (J.C. Penney) to 1.5 percent (Macy’s and Saks).

The more significant impact of Irene will be felt next month, Paul Lejuez, an analyst with Nomura Securities, said in a note to clients, because the beginning of this week, including Sunday, when many of the stores were closed, will be counted as part of the next period’s results.

At Costco, several warehouses closed briefly over the hurricane weekend, but “we saw a lift in sales prior to the weekend as members anticipated the storm,” a Costco spokesman said in a prerecorded message. Over all, the net effect of Irene was slightly negative, Costco said.

Costco also said Thursday that its longtime chief executive and one of its founders, Jim Sinegal, will resign on Jan. 1. He will be replaced by Craig Jelinek, who is Costco’s president and chief operating officer. Mr. Sinegal will continue as a board member.

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