Retailers report expected sales declines for August

Retailers today posted sales declines for August as shoppers held back on back-to-school purchases and continued to focus
on necessities, but overall results came in ahead of analyst predictions.

A monthly compilation of 31 retailers’
results by The International Council of Shopping Centers and Goldman Sachs showed sales in established stores fell 2.1 percent
in August compared with the same month in 2008. That was better than the 3.5-percent to 4-percent drop expected. About half
of the 30 retailers reporting August results missed expectations, but half topped them, according to a poll by Thomson Reuters.

The winners were mainly discounters, but declines were less than expected in the specialty apparel and department
store sectors as well.

"It really was all about value and price proposition here," said Ken Perkins,
president of retail consulting firm Retail Metrics. "If you’re off-price or discount-oriented and conscious of price
points you fared very well in August."

There have been some signs of a stabilizing economy. On Tuesday,
a report showed the U.S. manufacturing sector grew in August for the first time in 19 months. Also, a gauge of future U.S.
home sales rose more than expected in July to the highest point in more than two years.

Any recovery will have
to include an uptick in consumer spending, because it accounts for about 70 percent of economic activity.

Today’s
results showed widespread sales declines, but there were some indications that may be turning around, said Michael Niemira,
International Council of Shopping Centers’ chief economist.

"It’s still weak in the broad trend, but
it is considerably stronger than it has been in some time," Niemira said. "We’re starting to see some underlying
improvement that is certainly encouraging."

He said the results could indicate a return to positive sales
at established stores by the end of the year, because year-ago comparisons begin to ease in September, and become much easier
after that, as retailers anniversary the year-ago sales drop off amid the financial meltdown. If Wal-Mart Stores Inc., which
stopped reporting monthly sales figures in May, were included in the monthly tally, it might already be positive, he added.

"I think August is the start of this transition to better times for the industry," Niemira said.

Discounters remained the best performers. Target Corp. said sales at established stores dropped 2.9 percent, much
better than the 5.1-percent drop analysts expected. Health care products were strong sellers, while apparel and home products
were weaker.

Meanwhile, warehouse club operators Costco Wholesale Corp. and BJ’s Wholesale Club Inc. both reported
results fell but also beat analyst expectations. Food remains a best seller at the clubs while apparel and jewelry were weaker.

TJX Cos., which operates discount chains TJMaxx and Marshall’s, said its 5-percent increase topped expectations
as consumers hunted for bargains.

Upscale retailers meanwhile reported a weak month. Saks Inc. said results dropped
more than analysts expected.

The teen sector was weak as back-to-school sales failed to take off. Hot Topic Inc.
sales in stores open at least a year fell 8.1 percent, a bigger drop than the 6.9 percent predicted by analysts. The Buckle
Inc., typically an outperformer, said results rose but missed analyst expectations. Aeropostale Inc., which has outperformed
competitors by focusing on low prices, said results rose more than analysts predicted. Meanwhile, Abercrombie & Fitch
Co., which has kept prices relatively high, reported a 29-percent drop, bigger than expected.