School selling season looks bad for retailers

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The poor August numbers from the Reuters/University of Michigan consumer sentiment survey were sort of a "macro warning" that retail sales may be tough in the next few months. That means that the critical "back to school" season may not go well for stores that sell items bought for primary school and collage students. New analysis from The New York Timesand research date from ShopperTrak indicate that store traffic could be down by as much as 10%.

The news is devastating for retailers, and may be particularly bad for clothing stores with products aimed at the youth market like Abercrombie & Fitch (NYSE:ANF) and operations like CVS (NYSE:CVS) which have sections of their stores that sell school supplies.

The school sales numbers will also be a foreshadowing of the holiday season, particularly if unemployment continues to rise. Sales were down so much in the fourth quarter of 2008 that it ruined some retail companies and badly damaged others. A repeat of that could put some operators with thin balance sheets out of business for good.

Douglas A. McIntyre is an editor at 24/7 Wall St.

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