Sep. 4--There was little agreement on retail sales in August, with some analysts applauding the month's sales declines as not so bad while others said it was a harbinger of a poor holiday season.

"I think consumers are out of cash and aren't spending as much in stores," said Britt Beemer, chair of America's Research Group in Charleston, S.C. "They're only buying the items their kids had to have."

If numbers don't improve in the coming weeks, he predicts holiday sales will be down -- the first time in 30 years with two consecutive years of holiday sales declines.

Any national economic recovery will have to include an uptick in consumer spending because it accounts for about 70 percent of economic activity.

Although about half of retailers who released monthly results beat expectations, analysts said it only meant sales declines were not as steep as expected and were hardly a harbinger of better times.

"Things were less bad, as opposed to a little better, this month," said Stan Pohmer, a retail consultant in Minnetonka. "Target Corp. was down 2.9 percent in comparable stores, and they had planned to be worse than that."

Indeed, some analysts predicted a 5.1 percent drop. "But being down 2.9 percent is still not good," Pohmer noted.

For its part, Target was pleased with the decline. August traffic was flat, marking a "meaningful improvement from second-quarter trends," noted Gregg Steinhafel, the Minneapolis-based chain's chair and CEO.

A monthly compilation of 31 retailers' results by the International Council of Shopping Centers and Goldman Sachs showed sales in established stores fell 2.1 percent in August compared with the same month in 2008. That was better than the 3.5 percent to 4 percent drop expected.

In a reflection of consumer spending habits, discount stores such as Target had some of the best sales numbers, followed by warehouse stores such as Costco, while upscale stores such as Saks fared less well. In recent months, discounters, particularly Wal-Mart Stores Inc., have benefited from consumers switching to cheaper stores and focusing on necessities.

Some analysts said the late Labor Day weekend may have pushed some back-to-school purchases from August into September. But others said that back-to-school sales were down despite heavy customer traffic and that it was a bad omen for the holiday selling season.

Teen chains fall farthest

The slow back-to-school period was reflected in results at children's and teenage chains, which had some of the biggest declines at stores open at least a year, known as same-store sales: Abercrombie & Fitch (down 29 percent), American Apparel (down 20 percent), Zumiez (down 12.1 percent), Wet Seal (down 11.2 percent); Hot Topic (down 8.1 percent); Children's Place (down 8 percent); American Eagle Outfitters (down 7 percent); Limited Brands, which owns Victoria's Secret and Bath & Body Works (down 4 percent).

"A shift of back-to-school purchases from August to September creates a little upside for September," Pohmer said. But even then, back-to-school revenue won't be as big as it was before the recession because consumers are buying items as their children need them rather than stocking up on school supplies.

Some analysts blamed the federal government's "cash for clunkers" car trade-in subsidy for contributing to the retail sales decline. They claimed consumers spent their discretionary income on cars rather than clothes or school supplies.

"Cash for clunkers benefited the auto industry for one month, but what are the consequences for consumer spending? Buying those new cars took discretionary dollars off the table, and that does not bode well for consumer spending," Pohmer said.

Added Beemer, "I think the recession won't be over for retailers until Labor Day 2010 -- and it could be later than that."

Steve Alexander --612-673-4553

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