No one is quite sure what to expect from this year’s back-to-school shopping season.
Sales at Becker Surfboards, including stores in Corona del Mar, Huntington Beach and Mission Viejo, have been hot and cold, said Dave Hollander, president of Torrance-based Becker.
“If it hadn’t been for the last five weeks, I’d have said sales would be down 20% for back-to-school,” Hollander said. “We had a bad first quarter. But June turned it around and July has been crazy good.”
Hollander is betting August and September will be good, too.
The back-to-school season starts in earnest in late July and runs through mid-September.
The blasting hot temperatures, soaring gas prices and rising interest rates have put pressure on retailers and clouded their ability to predict sales. The summer has been a mixed bag, particularly at teen retailers.
Same-stores sales at Hot Topic Inc. dropped 7.2% in July. Anaheim-based Pacific Sunwear of California Inc. recorded a 10.6% decline. Foothill Ranch-based Wet Seal Inc. bucked the trend, with same-store sales rising 6.4% after a weak June when they were off by 4%.
It’s not just regional chains that are showing mixed results. Gap Inc. reported a 4% drop in July same-store sales, though Abercrombie & Fitch Co. saw a 4% gain.
Nationally, same-store retail sales bounced back in July from a weaker June.
Sales rose 3.5% in July, according to the International Council of Shopping Centers-UBS report, up from an estimate of 2.5%,but down from the sales pace through the first seven months of the year.
Costa Mesa-based Volcom Inc. is feeling PacSun’s struggles. The maker of surf and skate clothes recently got hammered on Wall Street after reporting a projected slowdown in the third quarter.
The culprit: slowing orders from PacSun, its biggest customer, and a more conservative outlook from small surfwear shops.
Since the back-to-school season typically “foreshadows” winter holiday spending, it’s hard to “ignore the possibility that a sales deceleration in July could be a harbinger of further bad news,” said Elizabeth Pierce, an analyst at Sanders Morris Harris.
“It might signify the first crack in the consumer’s willingness or ability to continue to spend through a slowdown in the housing market and higher interest rates, gas prices and energy prices,” Pierce wrote in a recent report.
But the slump could be a matter of “bad timing,” Pierce said.
Temperatures across the nation are scorching just as heavier fall clothes arrive, such as jackets and sweaters, she said.
People are buying air conditioners and ceiling fans, and “wear now” pieces such as tank tops and shorts instead of heavier fall clothes that are full-priced, Pierce said.
The recent heat wave sent many customers to beaches instead of stores, said Ryan Weaver, assistant manager at Laguna Surf and Sport in Aliso Viejo.
Laguna Surf hopes to lure shoppers for back-to-school with cool backpacks and sales on board shorts and other garb, which it will promote with flyers, Weaver said.
“It brings in people,” he said. “We get a lot of new customers who didn’t know we were here.”
E-mail blasts are another way stores are getting word out about promotions. Becker sent one, and so will Killer Dana, which has stores in Dana Point and San Clemente.
Killer Dana revamped displays to incorporate more hot sellers for back-to-school, such as backpacks, bigger purses, shoes and even notebooks, said operations manager Jamie Ivins.
Becker is bringing in more stuff that’s selling now,board shorts, T-shirts and denim pants.
The challenge: “How to get enough stuff in the pipeline so that I can quickly stock the stores and I don’t miss opportunities,” Hollander said.
Will shoppers come?
It depends on who you ask.
Washington, D.C.-based National Retail Federation said families with school-aged children will be spending more on back-to-school shopping this year than last.
The average family is expected to spend $527, up from $444 in 2005. Total spending is expected to reach $17.6 billion, with electronics being a driver, up from $13.4 billion last year, according to a recent federation study.
But Port Washington, N.Y.-based The NPD Group Inc., which also tracks consumer spending, tells a different story.
The group said consumers are planning to shop later and spend about the same amount as last year, according to a NPD survey of more than 40,000 shoppers.
Analyst Marshal Cohen of NPD Group recently told Reuters that consumers sense a lack of must-have items and have a willingness to wait before buying.
“The end of the third quarter is where you’ll see the absence of back-to-school. And it’s a clear indication of what’s going to happen for (the) holiday,” Cohen said.
More optimistic is Eric Beder, an analyst at Brean Murray Carret & Co. He’s “upbeat” about the shift in fashion trends at stores, such as longer tops, dresses, new denim “skinny” pants with a very narrow leg, and bolder colors, such as red, navy blue and green, according to a recent report.
“We believe after a dull spring that the consumer, despite nagging energy prices and rising interest rates, will not be disappointed by fall looks,” Beder wrote. “The fashion excitement for back-to-school/fall is building, with consumers on the hunt for unique and differentiated items that will result in full price spending.”
Wet Seal has been making changes to capitalize, Beder said. The company’s Arden B. chain, which targets an older shopper than its Wet Seal stores, has slowed its discounting and rolled out new garb, such as longer tops and dresses.
Arden B. also is pushing collections and “matching color tops and bottoms, which have been sadly lacking from the chain over the past year,” Beder said.
And Wet Seal’s shipments are “once again on schedule” and the chain’s new strategy of offering timely, trendy clothes “has allowed it to capture key wear-now sales,” Beder said.
PacSun has improved its girls clothing mix at its PacSun chain, particularly in denim pants, said Pierce of Sanders Morris. But it may not have brought in enough options, such as tanks, that people will wear while it’s still warm, she said.
Parents typically don’t want to pay for a wardrobe that kids won’t wear for months, she said.
“At the end of the season, (you’ll find that) the retailers that outperformed had a greater composition in wear-now merchandise,” she said.
