Back-to-school season got off to a slow start as retailers hoping for robust business last month instead saw tepid sales and continued consumer frugality.
Major chain stores reported that sales rose a modest 2.9 percent in July compared with a year earlier, according to Thomson Reuters' tally of 28 retailers. That was lower than the 3.1 percent increase analysts had predicted and marked the fourth straight month of missed expectations, said Ken Perkins, president of research firm Retail Metrics Inc.
Teen retailers were the biggest drag on the retail industry, with Hot Topic posting a 9 percent sales decline, Wet Seal reporting a 4.3 percent drop and American Eagle Outfitters seeing flat sales.
Even Aeropostale, a relative bright spot in the weak teen sector in recent months thanks to lower prices than many of its competitors, struggled in July: The chain posted a 1 percent increase, far below the 7.1 percent rise that analysts had expected.
Still, there were pockets of strength.
The Limited saw robust sales last month, with a 12 percent increase. In the department store sector, Nordstrom saw sales rise 7.6 percent, and Macy's said sales rose 7.3 percent.
After two lackluster back-to-school seasons, retailers said they're counting on this year's to help pull them out of a prolonged slump. Many executives underscored the significance of the season, which after the holidays is considered the most important time of the year for retailers.
"It tends to be an indication of the consumers' mindset in terms of how they're feeling about buying what they need versus what they need and what they want," said Mark Snyder, chief marketing officer at Kmart, which doesn't report monthly sales.
Many retailers have stepped up their efforts, rolling out discounts, new apparel lines and turning to social media to woo young shoppers.
"We're not counting on a lot of help from the economy, so it's a market share game," said Mike Boylson, chief marketing officer at J.C. Penney, who noted that consumers were willing to spend on the right items.
Although July was a mixed month for retailers, chains are hoping that sales pick up in August and September, especially because many consumers have indicated that they are ready to spend on back-to-school apparel and accessories.
A recent survey by the National Retail Federation said the average U.S. family with students in kindergarten through high school will spend $606.40 on clothes, shoes, supplies and electronics, a 10.5 percent increase from last year.
