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 | ![[UP]](/public/resources/images/info-uparrow12082005161844.gif){kind=small}
|
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 | ![[DOWN]](/public/resources/images/info-downarrow12082005161844.gif){kind=small}
|
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 | ![[SIDE]](/public/resources/images/info-sidearrow12082005161844.gif){kind=small}
|
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
Slow back to school sales? No surprise here.
I’ve watched the ads since June — THERE WAS NOTHING TO BUY.
Nothing “new.” No MTV celebrity for the sheep, err, teen buyers to follow. Just T-shirts (by whatever name) and jeans, jeans, jeans, and more jeans.
I said this back in July, but I guess I didn’t wave my hands around enough, so nobody noticed.
What were refi withdrawals in 2005, $600 billion per NT’s Asha Bangalore? They won’t be this year: cf http://www.bignose.org/blog/index.php?/archives/43-Home-equity-and-mortgage-rates.html where I do a chart of home-equity withdrawals vs rates and link to Bangalore’s fabulous 8/21 note on same.
Any drop is likely to come right off consumer spending — and for a change, not at the Wal-Mart/Target bottom, but in the Costco/Home Depot upper-midrange. WMT and TGT got hit by weak working-class wage growth and rising gasoline prices, of which the latter at least seems to be reversing. For that, cf http://www.tfc-charts.w2d.com/charts/UGW.GIF and of course recent TWIPs at http://tonto.eia.doe.gov/oog/info/twip/twip.asp
I don’t think “the consumer” as a whole crumbles until the settling housing market works its magic and crimps enough consumption that producers pull in their horns a little. ‘Til then, I am focusing on retailers who gained most from rising housing prices.
Back-to-school isn’t what it used to be… not many June Cleavers out there getting the Beav ready for the new school year in say LATE JULY. Now kids are lucky if they are ready for school by Halloween.
And this isn’t a slam on working Moms… its just the way it is. I mean Dad can push a cart & swipe his card at Target just as well as Mom. It just doesn’t get done on the same schedule as years past… it isn’t high priority.
As a result its silly to think there will be a sharp & intense ‘BTS’ season anymore than the Holiday Season is well defined… heck the Holidays start around Halloween and stretch into January or February…
Marketers need to wake up – get out of the office and walk around America a little more, see how real people live – then write a memo to the execs… ‘News Flash – things have changed, it isn’t 1958 anymore’. Their forecasting might improve a bit if they did.
Whether there is a BTS or not, you can still easily compare August 2006 with 2005 . . .
I (still) blame the record companies. They are so busy defending their so called assets, they have taken their eye off the ball.
Their primary job is to ESTABLISH TEEN FASHION TRENDS.
Nobody did it, so no trends, so no sales.
Somebody should be fired. Doesn’t Christina Britteney Simpson have an even younger sister to promote?
Memo to the shepherds — stop scaring the sheep out of their overpriced houses (lucrative though this will turn out to be for somebody), and go back to dressing them up.
(hey — it’s a holiday — nobody pays me to think clearly on holidays)
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Whether there is a BTS or not, you can still easily compare August 2006 with 2005 . . .
But that’s EXACTLY the point… June down, July up, August down… so on. Putting too much emphasis on THIS August just because its ‘back-to-school’ time is crazy… Its like getting all worked up about good or bad Thanksgiving Weekend sales and implying that’s how the holiday’s will go… Nothing will be known until two months AFTER the holidays when all the gift cards come in.
Likewise fall season sales – heck its still hot where I live & we border Canada. You think my wife bought fall stuff for the kids yet? No chance. She hasn’t even thought about fall stuff for herself. Now if it snows later this week she’ll maybe get around to it…
I just think the marketing forecasters aren’t in tune with the market and haven’t been for a while. They are continually surprised both up & down by things I would expect ‘pros’ to not get surprised by. An amateur like me surprised, sure… a pro who does this for a living? No.
JMHO.
while many of the market movers are showing no slow down and continue to demostrate a sale growth, I propose to discuss and give some more light to the principal Price formation, the determination of the level of the contract prices, so the basis the core foundation of the consumer spending depends in my view not so much on disposal income but on extrernal factor like corporate bidding and contrating out ove the produstion aspects.
Am I talkative too much?