The nation's retailers are reporting surprisingly solid gains for August, helped by aggressive discounting, even as unusually hot weather and job worries kept a lid on back-to-school buying.
The results are providing a sliver of hope for the economic recovery, but worries still remain about the holiday season.
As merchants report their results Thursday, Costco Wholesale Corp. posted a robust gain, boosted by higher gas prices and improved international revenue. Limited Brands Inc. and Macy's Inc. also had solid revenue increases.
But shoppers are still keeping to their lists, hurting a number of clothing stores such as The Bon-Ton Stores and Gap Inc. Target Corp.'s results came in below expectations.
The figures still mask some underlying weakness in consumer spending, because they're being compared with a weak August 2009. They're based on revenue at stores open at least a year, considered a key measurement of retailer health because it excludes the effects of stores that open or close during the year.
"It's a glimmer of hope that the numbers are coming in ahead of low expecations," said Ken Perkins, president of research firm RetailMetrics. "But it took retailers being heavily promotional to bring shoppers in. There's still serious concerns about the consumer's ability to spend during the crucial November and December periods."
Retailers, including many teen merchants, were aggressively promoting jeans in July as they sought to lure jittery shoppers in the stores. Tax-free holidays in nearly 20 stores also helped to lure shoppers. But still consumers remained selective about buying for back-to-school as they worry about a faltering economy. Emanual Weintraub, president of his namesake retail consulting firm said that "consumers are buying what they absolutely need and are being very careful about it."
Costco said that revenue at stores open at least a year increased 7 percent in August, buoyed by higher gas prices and improved international revenue.
This topped the 4.2 percent rise that analysts surveyed by Thomson Reuters expected. But fourth-quarter and full-year revenue missed Wall Street expectations Limited, operator of Victoria's Secret and Bath and Body Works, said revenue at stores open at least a year rose 10 percent in August, ahead of analyst expectations. Analysts surveyed by Thomson Reuters, on average, expected the figure to rise 7.3 percent.
Macy's said revenue rose in August as back-to-school shopping helped the company top Wall Street forecasts.
Revenue from locations open at least a year rose 4.3 percent during the month. That's better than the 4 percent gain expected.
Target said sales of back-to-school items and food helped revenue in stores open at least a year rise 1.8 percent in August. But the discount retailer's results fell just short of expectations for a 2 percent increase. Food, health care and beauty items were the strongest sellers. Electronics and home decorations were weaker.
Aeropostale, hurt by the aggressive discounting at competitor Abercrombie & Fitch, struggled with a 1 percent decline, missing analysts' expectations of a gain. Analysts expected the figure to rise 1.2 percent. The company said it had better results in peak back-to-school regions, showing shoppers are buying more close to when they need the items.
Preppy teen clothier Abercrombie & Fitch Co. reported a 6 percent gain in August, slightly ahead of analysts' expectations.
Analysts surveyed by Thomson Reuters, on average, expected the figure to rise 5.9 percent. But what helped drive business was a generous 40 percent discount, analysts say.
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