Last-minute spending on back-to-school products provided a welcome lift to many retailers in August, helping the latest monthly sales results to come in ahead of expectations.
Bolstered by promotions, sales at stores open more than a year – a key gauge of retail demand – grew at a slightly stronger 3.4% pace in August, according to Kantar Retail. The results were better than the 2.9% same-store sales gain last month – and was also up from a 2.4% decline in August last year, the consultancy said.
“August sales held up relatively well because shoppers’ intention to curb their spending plans was outweighed by their back-to-school needs, especially when they scrimped on meeting those needs a year ago,” noted senior economist Frank Badillo.
The results may have been even stronger if hot and dry weather had not curbed demand for warmer autumn fashion ranges that began arriving in stores.
Apparel sales also benefited from tax-free weekends in three large states – Florida, Illinois and Massachusetts – that did not occur last year, according to Michael McNamara, vice president, research and analysis for MasterCard Advisors’ SpendingPulse.
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By GlobalDataIts research put total US apparel sales back in positive territory in August, up 2.6% year-over-year, following a 1.1% drop in July. This means that on a year-over-year basis, apparel has been up in five out of eight months this year.
All sub-sectors except for women’s apparel and men’s apparel posted increases, with the children’s category up a solid 8.4% year-over-year, and family apparel up 4.1%. Footwear posted a modest increase of 0.9%.
Following July’s sharp decline, men’s apparel was down only 1.9% in August, while women’s apparel, down 1.9% in July, slipped a little further in August – falling 2.7% year-on-year.
The results, which included some strong performances at department stores and teen retailers, are seen as particularly encouraging for firms as they head towards the all-important holiday shopping season, especially if they’re prepared to resort to discounts to drive sales.
McNamara also notes that while the back-to-school season tends to peak in August, “some spending in apparel can be pushed back into September as parents delay purchasing fall and winter clothing until cooler weather conditions set in.”
On the downside though, retailers have largely benefited from easy comparisons with tumbling sales a year ago – and will find the going gets tougher during the rest of the year when they’re measured against an improving performance in 2009.
And some analysts fear that while higher levels of promotions might have helped persuade shoppers to open their purses, they may also dent retailers’ third-quarter profit margins.
Click here for the US retailers’ August 2010 sales roundup.
