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Late back-to-school buying spree help boost August results

SHARE Late back-to-school buying spree help boost August results

NEW YORK — Consumers returned to the malls in August for a late back-to-school buying spree, helping many retailers rebound from July's sluggish pace. But analysts are still worried that the weakening housing market and higher food and gas prices will curtail shopping in the critical months ahead.

As the nation's retailers reported solid sales results Thursday, winners crossed all sections of the industry and included Wal-Mart Stores Inc., Target Corp., Pacific Sunwear of California and Saks Inc.

"It certainly looks like the final week and a half in August drove strong back-to-school apparel selling," said Ken Perkins, president of RetailMetrics LLC, a research company in Swampscott, Mass. "But I am still concerned going forward. We still have all the macro headwinds."

According to a preliminary tally by Thomson Financial, 24 retailers beat estimates, while 11 missed expectations.

August's results were helped in part by a growing trend among schools to start classes later, delaying back-to-school purchasing. Teens usually wait to do the bulk of their shopping until they see what their friends are wearing. Last month's business was also boosted by a shift in a tax-free sales week to August in two critical states, Florida and Texas.

Still, a slumping housing market, the shrinking availability of credit and turbulent financial markets weigh on consumers, according to the New York-based Conference Board's report late last month.

Wal-Mart, the world's largest retailer, posted a 3.1 percent increase in same-store sales or sales at stores open at least a year, helped by strong sales of back-to-school items. Same-store sales are considered a key indicator of a retailer's health. The results, which excluded sales of fuel, were better than the 1.5 percent estimate of analysts surveyed by Thomson Financial.

Wal-Mart said electronics, school supplies and children's apparel were among the top-selling categories. It also said sales of laptops and calculators did well, as families prepared for later school start dates in some states such as Florida and Texas. The discounter said increased price cutting also helped boost sales of such items as bedding, bath towels and plastic storage and organization items.

"We are pleased with our performance during August, because it reflects continuing momentum in grocery and electronics. Home and apparel are expected to continue improving into the fourth quarter," said Eduardo Castro-Wright, president and chief executive officer of Wal-Mart Stores U.S. in a statement.

Wal-Mart projected that same-store sales will be up 1 percent to 3 percent in September.

Rival discounter Target also posted strong results, turning in a 6.1 percent gain in same-store sales, better than the 5.0 percent estimate.

Luxury stores again did well as shoppers splurged on status handbags and other expensive items. Saks Inc., which operates upscale Saks Fifth Avenue, reported a robust 18.2 percent gain in same-store sales, beating the 9.2 percent estimate. Nordstrom Inc. posted a 6.6 percent gain in same-store sales, slightly exceeding analysts' expectations for a 6.3 percent increase.

Macy's Inc. posted a 2.4 percent gain in same-store sales, better than the 0.3 percent estimate. But the company said same-store sales could be down as much as 3 percent in September, compared to the year-ago period, when business was boosted by the company's nationwide brand launch.

Gap Inc. had a 1 percent drop in same-store sale, less than the 2 percent decline analysts expected.

AnnTaylor Stores Corp., citing improving sales at both its namesake stores and its lower-priced LOFT division, posted a 2.9 percent gain in same-store sales in August

Limited Brands Inc. had a modest 1 percent rise in same-store sales, below the 1.4 percent forecast.

Teen retailers scored a strong rebound from sluggish results in July. Wet Seal Inc. reported a 1.7 percent gain in same-store sales, better than the 0.6 percent estimate. Abercrombie & Fitch had a 6 percent gain in same-store sales, better than the 2.1 percent projection.

Pacific Sunwear posted a 9.6 percent gain in same-store sales, surpassing the 0.9 percent forecast.

On Wednesday, J.C. Penney Co. reported a 4 percent drop in same-store sales, though results were better than the 5.3 percent decline Wall Street expected. Penney said monthly results were distorted by a change in the calendar that moved sales from the first few days of August into the July reporting period, when same-store sales jumped 10.8 percent.