South Florida Sun-Sentinel Personal Finance Column: Discount Retailers Seem to Be Doing the Best During Slowdown
Sunday, September 14, 2008 5:59 AM
Symbols: ACN, ANF, BJ, COST, DDS, FDO, JWN, PSUN, TGT, WMT
(Source: South Florida Sun-Sentinel)trackingBy Harriet Johnson Brackey, South Florida Sun-Sentinel

Sep. 14--The back-to-school shopping experience I had this year stuck with me.

I'd heard that Wall Street was expecting the season to be a bust.

But there I was, in a deep-discount clothing store, in a swarm of buyers, at the end of one of several long lines of people snaking through the store waiting to check out.

It took at least 20 minutes to make it to the register, because so many people had so many big baskets of clothes.

At the mall, full-priced, brand-name apparel was just sitting there. Bored-looking, like the store clerks.

Back-to-school shopping would happen, I thought, but only at the stores that offer quality merchandise and the best possible deals.

It was such an important season to retailers and this year, especially tricky. Back-to-school is a $20 billion event, the National Retail Federation says. It's the second-largest shopping season and a key signal for how the estimated $31 billion holiday buying spree will go.

A lot of the school-related spending comes from teenagers. While their spending is often considered to be somewhat insulated from what's happening in the rest of the economy, they were a little more connected to the bad news than usual this year.

The past few months turned out to be one of the worst summer job markets in recent memory. Teens faced huge unemployment. In July, 20.3 percent of 16- and 17-year-olds didn't have a job. In 2007, the summer average unemployment rate for these teens was 15.7 percent.

And they're getting what analyst Adrienne Tennant, head of consumer research at Friedman, Billings, Ramsey & Co., calls "an economic lesson on a daily basis when they go to the gas station or they buy food at the mall or clothes."

No wonder a majority of teenagers told Teenage Research Unlimited, a market research firm, that they were going to keep the back-to-school tab the same as last year, or they'd spend less.

Ditto their parents. Here's how the season has turned out:

In August, discounters such as Wal-Mart Stores saw sales rise (up 3 percent in stores open at least a year), as did BJ's Wholesale Club (same-store sales up 15.4 percent -- half of that was gains in merchandise sales and half, gains in gasoline sales), Costco Wholesale Corp. (up 9 percent) and Family Dollar Stores (up 3.6 percent).

By comparison, Dillard's said same-store sales in August were down 7 percent, Nordstrom's sales slid 7.9 percent and even Target was down 2.1 percent. Teen apparel retailers American Eagle, Abercrombie and Fitch and Pacific Sunwear of California also reported that same-store sales in July and August fell.


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