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Wary retailers crank up deals

At Tyrone Square Mall in St. Petersburg, the price-cutting is fierce: 40 percent off all Southpole apparel for teens, Lands End at half price and $14.99 for Seven jeans that started out at $59.99.

At JCPenney, which chose to launch six juniors brands this back-to-school season, the forest of signs drawing shoppers bill "75 percent off" and "buy one, get one for $1."

At Dillard's, Denise Ellis, a St. Petersburg mother of two, carried an armful of tops for her daughter, Jade, that were 75 percent off plus a 5 percent donation to the school of her choice.

"I'm real happy with the prices," said Ellis, who runs a Mary Kay skin-care business. "I don't recall them consistently this low for back-to-school. We might even pick up a few things we don't need yet."

As the back-to-school season limps into its final weekend, retailers wish there were more Denise Ellises out there. Evidence is mounting that $92-billion in federal economic stimulus rebate checks so far failed to reignite dormant spending.

With retail sales still stagnant in July and no help this time from a statewide back-to-school sales tax holiday, retailers had to dial up the discounts to prod wary shoppers to spend and clear out unsold inventory. Consumer spending accounts for two-third of the economy and back-to-school is the biggest season of the year behind Christmas for apparel stores.

"We're as (promotionally priced) as ever," said Karen Hoguet, chief financial officer of Macy's Inc. "In fact, we could not be more promotional."

Nationally, retail sales fell 0.1 percent in July — a worse than expected showing — thanks to lethargic auto sales that slipped 2.4 percent, said the U.S. Commerce Department on Wednesday. Not counting autos, retail sales were up 0.4 percent. Excluding gasoline and autos, sales rose a meager 0.3 percent.

Analysts and some chain store executives interpreted the results — the weakest in five months — as another sign cash-strapped consumers will continue sitting on the sidelines well into the fall. Already some Democratic congressional leaders and the National Retail Federation are talking up a second round of stimulus checks even though it would deepen an annual budget deficit already projected to hit $482-billion.

Studies have found frugal shoppers poured less than half their $300 to $1,200 per household economic stimulus checks into consumer spending. Instead most of it went to pay down credit card debt, into savings or to cover higher gas prices. Without rebates, however, retail sales would have been more dismal.

With their help, the overall economy grew at a 1.9 percent annual rate in the April to June quarter and is forecast to remain in that range through September, according to David Wyss, chief economist at Standard & Poor's Corp. He sees a decline in GDP for the two quarters after that as the rebate impact ends.

Gas prices are coming down from a high of $4.11 a gallon.

"But there are too many other negatives too large for a gasoline price decline to change the story," said Nigel Gault, chief U.S. economist for Global Insight.

The culprits are familiar: the housing and lending crisis, record consumer debt, rising joblessness and rising wholesale prices partly triggered by energy prices.

Macy's, which Wednesday reported a 2.1 percent decline in stores open more than a year, trimmed its profit forecast for the year and credit card delinquencies and writeoffs rose in the quarter that ended Aug. 2.

"The good news is our customer creditworthiness is not getting worse," said Hoguet. "The bad news is, it's not getting better either."

While many retailers are reporting weak sales, there are exceptions as customers trade down. TJX Corp., which owns discount chains TJMaxx and Marshalls, reported a 4 percent gain in same store sales and discount store giant Wal-Mart Stores Inc. is expected to report a similar sales gain today.

Belt-tightening has also affected other types of spending. Americans are eating dinner out less, says NPD Group, and buying fewer groceries. A Nielsen Co. survey of bartenders and restaurant managers found people are drinking away from home less frequently and ordering less wine in favor of beer.

Information from the Associated Press was used in this report. Mark Albright can be reached at albright@sptimes.com or (727) 893-8252.

Wary retailers crank up deals 08/13/08 [Last modified: Thursday, August 14, 2008 11:43am]
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