By Ellis Mnyandu
NEW YORK, Aug 26 (Reuters) - Wal-Mart Stores Inc. , the world's No. 1 retailer, said on Monday sales in the recent week hit the low end of its August same-store sales growth target as warmer weather led shoppers to buy fewer back-to-school clothes.
It was the second time this month that Wal-Mart -- which has come to be regarded as a barometer of U.S. shopping patterns -- reported sluggish weekly sales trends but still within its 4 percent to 6 percent same-store sales growth target for August.
Wal-Mart's latest announcement coincided with a move by women's apparel chain Bebe Stores Inc. to cut its same-store sales outlook for the current quarter.
The cut highlighted a growing push by shoppers to curb spending as economic and Wall Street jitters remain paramount in their shopping decisions, analysts said.
Also reporting weaker selling patterns was Federated Department Stores Inc. , owner of Macy's and Bloomingdale's chains, which said sales in the recent week trended below its expectations of a 1 percent to 3 percent drop in August same-store sales.
Analysts said a weaker back-to-school season now threatens to dash hopes that retailers may continue to reap the benefits of cost cutting and inventory control, steps which helped many stores improve their profits through the first half of 2002.
The back-to-school season is second in importance only to the holiday season for retailers, many of whom have seen their profitability crimped since late 2000 when the U.S. economy began to falter.
Tierney Remick, global head of consumer markets at Korn/Ferry International, said consumers are asking themselves "whether the U.S. economy is rebounding or not."
She added that "consumers are also realizing the end (to the economic worries and stock market jitters) is not immediately in sight and therefore have become more conservative".
BAD YEAR
David Schick, an analyst at SunTrust Robinson Humphrey, said 2002 could end up being another "bad" year for retailers if selling and consumer sentiment did not recover soon.
"We are seeing mixed signals from the consumer. While interest rates remain low, a lot of news from retailers says that business is slower," said Schick.
He tracks hard goods retailers such as home improvement supply store Home Depot Inc. and No. 1 U.S. consumer electronics seller Best Buy Co. Inc. .
Schick added that the effect of lower interest rates in propping up U.S. consumers now appeared to be waning. Around this time last year many retailers had also been helped by tax rebate checks from the government.
The spending slowdown is hurting mainly items that consumers deemed as frivolous, particularly new clothes, analysts said.
"You have to ask whether you really need something or not," said Korn/Ferry's Remick.
Even after the Sept. 11 attacks, U.S. consumers had remained resilient until mid-July when deepening losses on Wall Street, and concern that the U.S. economy could be sliding into a recession just as it appeared to be emerging from one, began to stifle consumer confidence.
Bentonville, Arkansas-based Wal-Mart said school supplies were among the strongest sellers in the latest week. Although fashion apparel sales were strong, overall apparel sales were weak, the retailer said. It added that same-store sales at its discount stores were in the 4 percent to 6 percent growth range.
Carl Steidtmann, Chief Economist of Deloitte Consumer Business Research, said many of the retailers' woes also stemmed from a lack of pricing power. But even "growth of 4 percent (from Wal-Mart) is still not as bad in a deflationary environment", he added.
Steidtmann said deflation impact was more apparent in apparel retailing. But bucking the weaker trend was retailer J.C. Penney Co. Inc. , which said department store sales were running better than its expectations of flat to slightly higher same-store sales.
It cited strength in its back-to-school range, saying fine jewelry and children's and women's apparel were the strongest performers in the latest week.
(Brad Dorfman, in Chicago contributed to this story)