The Big Picture

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Back-to-School Sales

Monday, September 04, 2006 | 07:45 AM

As we noted Friday, Retail has become a mixed picture at best: We've seen some good numbers from some stores thanks to a late August shopping surge -- Wal-Mart was strong, Target was fair, CostCo poor.

These cracks imply the consumer is growing tired; Not yet Shopped Out -- but getting there. CNN Money noted that generally, Retailers back-to-school sales were mediocre. August retail followed a poor June but a strong July.

As the WSJ noted in Mixed Retail Results Breed Unease, families delayed purchases until just before the start of school year -- not exactly a confidence producing sign. Special incentives were needed to draw traffic, be it Tax holidays or summer clearance sales. Parents seemed more cautious about spending, and the Journal noted their focus on "essentials" -- discretionary items were bypassed. (The Journal column also carried a a terrific table -- see below).

By all appearances, the Consumer appears to be tiring.

Back-to-School Sales

With consumers taking a value-oriented approach to back-to-school shopping, here's a closer look at some retailers that are expected to do well this season based on merchandise and store traffic, and others that are likely to struggle, based on analysts forecasts.

Retailer	Fall Forecast	Notes
Abercrombie & Fitch		Good momentum going into season; strong outlook with sales of fleece hoodies, sweatpants and denim.
Aeropostale		Slow to introduce new fall items, but traffic up on sales of girls bottoms and denims. Hoodies and longer silhouettes also may help sales.
American Eagle		Same-store sales up 11% in August. New fall styles helped sales; it recently launched aerie by American Eagle, a collection of dormwear and intimates.
Costco Wholesale		August same-store sales rose, but it expects to miss its own prior guidance as well as analyst estimates because of thinner-than-expected profit margins.
Children's Place		Higher priced fashions expected to sell well.
Dollar General		High gasoline prices put pressure on customers; slashed its quarterly outlook.
Dollar Tree		Reported an increase in store traffic and the average amount spent per transaction, but high gas prices remain a concern.
Federated Department Stores		Helped by tax-free sales events.
Gap		Improved merchandise, but big ad campaigns haven't helped sales. Old Navy lacks assortment, analysts say.
Guess?		Right mix of merchandise for fall season.
Hot Topic		Overall weakness continued. August sales down 6%. While sales were down, amount spent per transaction was higher. Licensed goods disappointed.
J.C. Penney		Strong sales to start off season; helped by department-store consolidation and stocking of pre-season outerwear, but clearance events may eventually hurt sales.
Kohl's		Store traffic helped by late August sales events and clearing of summer stock. Dorm merchandise selling well.
Target		On track with the right merchandise mix, analysts say, but consumables to outpace discretionary products.
Wal-Mart Stores		Early and aggressive marketing promotions helped drive sales; bigger emphasis on consumer electronics.

Source: WSJ.com research

Source:
Mixed Retail Results Breed Unease
Teen Chains' Sales Increase But Gap, Penney Struggle;
JAMES COVERT and CHRISTOPHER CONKEY
WSJ, September 1, 2006; Page A2
http://online.wsj.com/article/SB115689416669948942.html