Retailers Terrified That No One Will Buy Back-To-School Junk

With high gas prices and reeling consumers, retailers are fretting that the once lucrative back-to-school shopping season will be disappointing.

Forbes: Just a couple of weeks or so until the kids return to school. Gas prices are high, consumer confidence low–an ugly picture for retailers trying to lure shoppers through the door at a critical time of year.

Even the most optimistic forecasts say 2008 will show the lowest seasonal sales growth in six years. The likely winners? Those offering cut-rate prices or spending heavily on promotions.

Wednesday the government reported July retail sales were the weakest in five months, with sales at department stores and general merchandise stores up just 0.3% from the prior year. The same day, department-store barometer Macy’s issued a lackluster earnings report, announcing it made 17 cents a share for the second quarter, two cents below Wall Street estimates. Same-store sales dropped 2.1% from last year’s quarter…

The National Retail Federation (NRF) is forecasting 2.5% growth in overall sales from last year, to $20.1 billion. Expect same-store sales, though, to come in flat or negative compared with 2007.

But there is one class of retailers who may be able to survive this downturn: discounters like Wal-Mart and its chicer cousin Tarzhay (Target):

“Discounters have the built-in advantage of offering apparel and groceries in the same store,” Carbonell says. With gas still hovering around $4 a gallon, who wants to make two trips?

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