Back-To-School Is Better Than Expected, But At A Cost

The silver lining on the cloud that is this retail back-to-school season is that many retailers have actually reported higher than expected sales. But those gains came at a cost: namely, heavy discounts to draw in reluctant shoppers.

Apparel retailers were the most drastic example. Aeropostale (NYSE:ARO) offered a 50 percent discount on everything over Labor Day weekend, while Loft (NYSE:ANN) slashed prices 50 percent on select items and cut them in half again for sale items.

Ken Perkins, president of the consulting firm Retail Metrics, told Fox Business that the extent of the discounts was definitely higher than it was this time last year.

"They seem to be above the norm," he said. "That was emblematic of just the lack of demand for back-to-school."

Retailers were aware of that tepid demand and tried to jumpstart the season early. Despite their efforts, and the late sales, there are concerns about how margins will turn out this quarter, not to mention how the year's second-biggest retail season augers for the big one: the holidays.

Even though jobs are coming back, most Americans still aren't spending freely on items like clothing, choosing instead to invest their money in more durable buys like cars and home improvement. While retailers were busy begging customers to come to the store, Autonation Inc. issued a report that new vehicle sales climbed 32 percent last month, highlighting strong luxury vehicle sales.

For more:

- See this Fox Business story
- See this Star Tribune story

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