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Retail sales weather hurricane

By Staff | Sep 2, 2011

LOS ANGELES – Shoppers showed resilience last month despite stock market turmoil and Hurricane Irene, although sales at some chains were negatively affected.

Sales at major chain stores rose a solid 4.4 percent year-over-year in August, according to Thomson Reuters’ tally of 23 retailers. That was slightly short of analysts’ predictions of a 4.6 percent rise.

Discounters, including Target Corp. and Costco Wholesale Corp., fared the best, posting a combined 7.8 percent increase that was helped by East Coasters flocking to stores to stock up before Hurricane Irene. Apparel chains posted weak results, with sales rising a meager 1 percent, although those results were dragged down by a dismal performance by Gap Inc.

Sales are based on stores open at least a year, known as same-store sales and considered an important measure of a retailer’s health.

On the East Coast, the hurricane dampened sales at some chains that were forced to close stores. Department stores seemed to bear most of the impact, with J.C. Penney Co. and Kohl’s Corp. each reporting that sales slipped 1.9 percent. Macy’s Inc., which reported that August sales rose 5 percent, said results would have been 1.5 percentage points higher if the hurricane hadn’t occurred.

But retailers that sell basic household items, including Target, Costco Wholesale Corp. and BJ’s Wholesale Club Inc., benefited from the storm. Wal-Mart Stores Inc., the nation’s largest retailer, no longer reports sales on a monthly basis, but reports last week indicated that the discount giant was seeing heavy store traffic on the East Coast in the days leading up to the hurricane.

August is the core of the three-month back-to-school shopping period, the second most important time of the year for retailers (after the winter holidays).

This year, back-to-school sales rose a solid 3 percent over the same period last year, according to MasterCard Advisors SpendingPulse, which estimates for all forms of payment.

“It’s the best back-to-school season we’ve had since 2006,” said Michael McNamara, vice president of research and analysis for MasterCard Advisors SpendingPulse. But he cautioned that results last year were soft and thus easy to beat.

Many shoppers continued to look for discounts as they shopped for their children. They include Rachel Ponce, a 37-year-old nutritionist from Studio City, Calif., who was shopping at T.J. Maxx in Burbank, Calif., recently. She said she was planning on buying just the basics for her daughter, who is entering kindergarten.

“Money’s tight, especially when you have two kids,” she said. “I’m not going to do a big shopping spree. We’ll probably just fill in the blanks: Keep the pants and get a new shirt or something.”

Among clothing sellers, Gap Inc. continued to struggle, posting a 6 percent decline that missed expectations for a 3.8 percent drop.

“In our view, Gap had a challenging month in terms of sales and margins,” Brian Sozzi, an analyst at Wall Street Strategies, said in a note to investors. “Traffic was sparse during our mall walks, coinciding with a stepped-up pace of promotions to clear inventory that is generally not resonating.”

Excluding the San Francisco company, parent to the Gap, Banana Republic and Old Navy chains, apparel sales rose a decent 3.8 percent, Thomson Reuters said.

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