By Dhanya Skariachan
NEW YORK, Sept 5 Many U.S. retailers reported
stronger-than-expected August sales on Thursday, but many of
them had to resort to deep discounts to attract back-to-school
The unusually high level of discounting raised concerns
about margins for this quarter. It also showed that apparel
chains might have to keep offering bigger incentives at a time
when consumers are spending more on their homes, cars and other
The level of discounting "was certainly higher than last
year," said Ken Perkins, president of consulting firm Retail
Metrics. "They seem to be above the norm. That was emblematic of
just the lack of demand for back-to-school."
The back-to-school season is the second-biggest selling
period of the year for U.S. retailers, behind the winter
Same-store sales for the nine U.S. chains that reported
August sales rose 2.9 percent, mainly hurt by Gap Inc
and L Brands Inc. Wall Street had expected a 3.2 percent
increase, according to Thomson Reuters I/B/E/S.
Retailers were primarily hurt by weak mall traffic, and a
highly promotional environment at the beginning of August.
"What you see is very strong durable goods spending" hurting
demand for items like apparel, said Michael Niemira, chief
economist of the International Council of Shopping Centers,
which expects same-store sales to rise about 4 percent in
Many consumers are buying cars and houses to take advantage
of still-low interest rates but are holding back on shirts,
dresses and shoes. In the run-up to the year-end holiday season,
this does not bode well for many retailers.
The Standard & Poor's Retail Index was up 0.6
percent on Thursday morning, outpacing a 0.3 percent gain for
the broad S&P 500.
Same-store sales are an important measure of a retailer's
performance because they strip out the effects of store openings
Fewer than a dozen U.S. retailers report monthly sales, down
from a peak of 68 in 2006. In the years since, big names such as
Macy's Inc, Wal-Mart Stores Inc and Best Buy Co
Inc have dropped out of the same-store sales index.
L Brands' same-store sales rose 2 percent in August, falling
short of the analysts' average estimate of a 2.2 percent gain.
The company is expecting low single-digit percentage increase
Mall-based apparel chain Cato Corp's same-store
sales fell 2 percent, while analysts expected a 3 percent drop.
"We remain cautious in regard to the remainder of the year,"
Chief Executive Officer John Cato said in a statement.
Gap, which sells clothing, accessories and personal care
products through the Gap, Banana Republic, Old Navy, Piperlime,
Athleta and Intermix brands, reported a 2 percent gain in August
same-store sales, slightly below the 2.2 percent gain analysts
Buckle, which caters to teenagers, reported a 1 percent
rise, beating estimates of a 0.4 percent increase.
Teen-focused retailer Zumiez Inc posted same-store
sales gain of about 3 percent, ahead of analysts' estimate of
Costco's same-store sales, including those of gasoline, rose
4 percent, just beating analysts' expectations of a 3.8 percent
gain. Demand was strong for health and beauty aids and food, but
weak for electronics, the largest U.S. warehouse club chain
Stein Mart Inc also topped same-store sales
forecasts for the month, reporting a 3.8 percent rise on strong
demand for everything from linens to women's dresses.
Walgreen Co, the largest U.S. drugstore operator,
reported a 4.8 percent increase, while analysts had expected
only a 2.8 percent rise.