Retailers May Flunk Back-to-School as Costs Soar, Sales Stall

[marmar]

from Bloomberg:



Retailers May Flunk Back-to-School as Costs Soar, Sales Stall

By Heather Burke and Zahra Burton

Aug. 6 (Bloomberg) -- Retailers in the U.S. may be dreading the approach of the school year almost as much as kids, given a forecast for the worst back-to-school season in seven years.

Even with projections for almost no growth, stores need to raise prices, says Burt Flickinger, managing director of Strategic Resource Group, a New York retail consulting firm. Otherwise, higher costs for everything from cotton, to shipping, to labor in China will eat away at already narrow profit margins, he said.

``It's an absolute balancing act,'' said Patricia Edwards, a portfolio manager with Seattle-based investment firm Wentworth Hauser and Violich. ``This is retail high-wire at its finest.''

Sellers and buyers are up against similar economic realities. Retailers such as J.C. Penney Co. in Plano, Texas, San Francisco-based Gymboree Corp. and Cincinnati-based Macy's Inc. must cope with higher costs and a U.S. dollar worth 9 percent less than a year ago. Their customers are confronting $4-a-gallon gasoline and food price increases amid a housing market decline, falling asset values and job losses.

Shoppers ``don't have any more money in their pocket,'' said Joseph Gromek, chief executive officer at New York-based Warnaco Group Inc., with brands that include Calvin Klein and Speedo. ``So to think that they're going to pay more for the same is not going to happen. The consumer is not willing and candidly today not able to spend more on discretionary items.''

Kathi Nunziato has noticed the price creep. As she shopped at a J.C. Penney's in Paramus, New Jersey, the mother of a school-age boy and girl said clothes she bought in June were more expensive by the time she returned to the store in July.

``I would say $5 per item'' more expensive, she said. ``They've gone up, just in that short time.'' .........(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601109&sid=a7YeEJTtniBc&refer=home

[Kittycat]

1. Resale

I jumped on the resale shops early last spring and scooped up some great bargains on summer play clothes. Everything was in excellent condition, I wouldn't even say wash wear - just washed. I plan on going again to get some things for fall/winter. And I'm not telling any of my friends about my favorite resale shop (LOL).

[knitter4democracy]

2. The kids and I hit OfficeMax for sale stuff--no one else there.

First of all, the sales are early this year, but secondly, people aren't out there buying anything. I got everything the kids needed for good prices, though I have to return my daughter's messenger bag, since it's too big for her to carry (that was from on-line, though).

Sales are way down, and I know that I'm cutting back. The kids will be getting uniform pants for school (the jeans I got last year didn't last more than 6 months, if that--waste of money) and wearing a lot of stuff until it's worn out. I'm not getting much new at all, though I will have to get new shoes.

[jedr]

3. My job puts me in Wal*Marts every week;

On the food end the warehouse is cutting back reserve stock to little or nothing ( they get 5-7 deliveries a week) . back to school merchandise is just sitting there....stores are near empty till about noon. Hard to have any money when the cost of most day to day items are going up at the rate they are, ie. gas, food, insurance and medical cost. Trickle down does not work....the money needs to be in the hands of the middle class for this economy to work. The top 2% don't care....they are going to take their money and and run and the hell with the rest of us. What they never understand is that it will bite them in th a** in the long run.