Area shoppers are flunking back-to-school sales period

Weak economy viewed as reason retailers are seeing poor sales

August 24, 2002|By Gus G. Sentementes | Gus G. Sentementes,SUN STAFF

For many retailers, the back-to-school shopping season might receive a failing grade.

Retailers are reporting sluggish sales during a shopping period second in importance only to the Christmas holiday shopping season. Consumers are spending cautiously on back-to-school items, especially clothing, as they face a weak economy and a shaky stock market, analysts said.

"Generally speaking, back-to-school has been terrible," said Eliot S. Laurence, a retail analyst with Jefferies & Co. Inc.

More shoppers continued the recent trend of turning away from department and specialty stores and toward discounters in their hunt for bargains on items from shoes and skirts to notepads and backpacks, analysts said.

"Consumers aren't only looking for the lowest price, they're buying fewer units," said Kurt Barnard, a consultant and president of Barnard's Retail Trend Report in Upper Montclair, N.J. "There's no question that many of these back-to-school dollars are migrating to discounters like Kohl's. ... The only thing saving retailers from a real disaster is that their inventories are very lean."

Parents planned to spend an average of $302.11 - 10 percent less than last year - on back-to-school items for their children, with the majority noting the uncertain economy and fears about job security, according to a survey this month by America's Research Group, a Charleston, S.C.-based consumer research company. But a clear picture of how retailers fared won't form until the end of October.

In Maryland this year, retailers could have used the boost generated last year by the state's first tax-free shopping week, said Tom S. Saquella, president of the Maryland Retailers Association. Retailers last year saw a 10 percent increase in sales for August, he said.

The tax-free period gave shoppers a break on the state's 5 percent sales tax on clothing and footwear costing less than $100. But the General Assembly didn't re-enact the measure because of the state's tight fiscal situation.

"[Retailers] I've talked with are a little apprehensive because it's been a so-so year at this point," Saquella said. "They're not so sure the fourth quarter is going to be strong. I think there's a lot of concern."

"It's not just about back-to-school, it's all the new fall merchandise," Saquella added. "Usually, as a pretty good rule, those stores that don't have a good back-to-school period aren't going to have a good holiday period, either."

The Gap Inc., owner of Gap, Old Navy and Banana Republic stores, has continued its downward slide this month, posting less-than-expected sales.

American Eagle Outfitters Inc. also has had sales below their expectations for August.

But discounters continue to lure shoppers.

At Wal-Mart Stores Inc., "school-supply sales and backpacks were above the prior year," said Lori Wilking, a retail analyst for H&R Block Financial Advisors in Detroit.

Sales of necessities will probably do better than apparel sales, which will remain soft until the weather gets cooler, Wilking said. Retailers are hoping parents and teens buy fall and winter apparel after school begins and as temperatures drop, she said.

Area mall managers said they don't have customer traffic or sales figures, but tenants are reporting that business is about the same as it was last year.

"We don't have hard numbers of sales yet, but in talking with the tenants, it seems they're about equal in sales with last year," said Charles P. Crerand, vice president and general manager of Owings Mills mall. "I would guess in our economy, if we're doing as good as last year, that's pretty good."

At Changes, a Baltimore-based urban-fashion retailer, president Gilbert Goetz expects baggy jeans and "fancy" denim - jeans that are sandblasted, washed out or designed with various patterns - to be popular choices for students as they head back to school.

But cautious spending is evident in teens such as Lindsey Cox, a 14-year-old entering her sophomore year at Baltimore's Western High School.

"If it was my grandma's money, I wouldn't care," said Cox, after shopping Thursday evening for shoes and shirts with her older cousin, Erica Taylor, at Towson Town Center. "With my money," said Cox, "I actually look at the prices and put stuff down."

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