Many Retailers Report Sluggish August Sales

By: AP
By: AP
Many of the nation

Mohammed Alsabahi stocks up on Ramen noodles at the recently opened Wal-Mart in Dearborn, Mich., Thursday, March 6, 2008. The nation's retailers got a little reprieve in February, as consumers hesitantly returned to malls and stores after retrenching in recent months. Among the big winners were discounters like Wal-Mart Stores Inc., whose results beat expectations. (AP Photo/Carlos Osorio)

NEW YORK - Many of the nation's retailers struggled with a sluggish back-to-school season, though Wal-Mart posted higher August sales Thursday as shoppers focused on buying essentials amid persistent worries about high gas and food prices.

As merchants announced their August sales results, Wal-Mart Stores Inc., the world's largest retailer, reported a solid gain that beat Wall Street forecasts as consumers stick to low-price operators. But mall-based apparel stores such as Wet Seal Inc. and Limited Brands Inc. remained in the doldrums. And high-end retailers Saks Inc. and Nordstrom Inc. posted weaker results as their affluent customers start to feel pinched.

"Consumers are spending on necessities and looking for value and the lowest price possible. And it's reflective again in the results that we are seeing," said Ken Perkins, president of research company RetailMetrics LLC.

According to a preliminary tally by Thomson Reuters, 12 retailers missed expectations, while eight merchants beat estimates. The tally is based on same-store sales, or sales at stores opened at least a year, which are a key indicator of a retailer's health.

Wal-Mart said that sales of groceries and back-to-school products helped its August same-store sales rise 3 percent. Analysts surveyed by Thomson Reuters had expected a 1.6 percent increase. Including fuel, the retailer's total same-store sales rose 3.5 percent.

"The underlying business performance for Wal-Mart U.S. continued to show strength and the improved relative performance has resulted in market share gains," Eduardo Castro-Wright, the president and chief executive of Wal-Mart's U.S. stores, said in a statement.

Wal-Mart expects same-store sales to rise 2 percent to 3 percent in the current month.

Another bright spot is warehouse club operators as shoppers buy in bulk to save money. Costco Wholesale Corp. announced a 9 percent same-store sales increase in August on Wednesday as higher gas prices boosted sales. Analysts had expected a 9.6 percent gain. Excluding the effect of higher gas prices, Costco's U.S. same-stores sales rose 6 percent.

Among luxury department stores, Saks recorded a 5.9 percent drop in same-store sales, steeper than the 4.7 percent decline that Wall Street expected. The weakest categories were women's apparel, women's shoes and intimate apparel, while the strongest categories were fashion jewelry, fragrances, men's sportswear and men's shoes.

Nordstrom recorded a 7.9 percent drop in same-store sales,a bit worse than the 7.1 percent decline expected.

On Wednesday, J.C. Penney Co. announced that same-store sales at its department store business dropped 4.9 percent, slightly better than the 6.3 percent drop that analysts surveyed by Thomson Reuters had projected. Penney also predicted a mid- to high-single digit decrease in same-store sales for the current month.

Kohl's announced on Wednesday a 5.8 percent drop in same-store sales, though the decline was less steep than the 7.6 percent expected by analysts.

Limited Brands, the operator of Victoria's Secret and Bath & Body Works, suffered a 7 percent drop, mostly in line with the 6.9 percent decline estimated from Wall Street.

Clothing and accessories retailer Stage Stores recorded an 8.3 percent drop in August. Analysts polled by Thomson Reuters expected a same-store sales drop of 1.7 percent.

Teen retailer Wet Seal recorded an 8.7 percent drop in same-store sales, as demand at its Arden B stores dropped. Analysts polled by Thomson Reuters expected a same-store sales decline of 7.5 percent.


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