More saving than splurging in lean back-to-school

By Lisa Baertlein and Alexandria Sage

LOS ANGELES/SAN FRANCISCO (Reuters) - This back-to-school season, high school student Tony Lopez is sticking to basics like jeans and shirts so he has enough money to buy his football equipment and go out on weekends.

"I'm on a budget. I kind of wasted $200 more last year," said Lopez, who bought from beach-inspired mall retailer Hollister with money from a summer restaurant job.

"This year I'm buying just the clothes that I need," said the 16-year-old high school junior from Los Angeles. He saved money by not getting new shoes.

Lopez is not alone in paring back, as consumers find themselves pinched by high food and fuel prices, falling home values and mounting job losses.

Los Angeles mom Lisa Adams said she's spending about $500 less this year on school clothes for her 9-year-old daughter Ashley: "Everything is so expensive."

Industry forecasters expect 2008 to be the worst back-to-school shopping season in 7 years, with similar weakness seen for the all-important holiday season.

U.S. retailers reported monthly same-store sales, a key gauge of retail health, on Wednesday and Thursday this week. Overall sales at stores open at least a year rose a slightly better-than-expected 1.6 percent in August, according to results compiled by Thomson Reuters Estimates.

That compared with a 3.1 percent gain in the year-earlier period.

Discounters -- Wal-Mart Stores Inc in particular -- posted some of the strongest results as they were able to lure more shoppers with low prices than department stores and specialty apparel retailers.

U.S. tax rebate checks that boosted spending earlier in the year appear to have dried up, and teens are light in the pockets after the worst summer jobs market in about 20 years.

50 PERCENT LESS

Maria Larin, a 23-year-old college student shopping at an Old Navy store in downtown San Francisco, said she was looking for a pair of jeans and maybe a blouse.

"Last year I bought more," she said, "50 percent more."

Larin also shops at department stores J.C. Penney and Macy's where she's noticed more sales recently.

As consumers turn their attention to value, a few companies have outperformed peers. They include off-price clothing seller Ross Stores and teen retailer Aeropostale Inc, whose prices are lower than rivals Abercrombie & Fitch Co and American Eagle.