Slow August sales signal more weakness in retail

Still, Michael P. Niemira, chief economist at the ICSC, thinks that gas prices will have to fall to $3 per gallon or below before shoppers will increase their spending. And even then, Americans face other economic worries such as slowing personal income, higher food prices and a slumping housing market.

"The fall in oil prices is a bit of good news, but we need to see more positive economic news," Niemira said. Oil prices, too, remain volatile. Retailers are now preparing for the next series of tropical storms, which could send oil prices back up.

Helped by sales of groceries and back-to-school products, Wal-Mart reported a solid 3 percent gain in same-store sales. Analysts surveyed by Thomson Reuters had expected a 1.6 percent increase. Including fuel, same-store sales rose 3.5 percent.

Wal-Mart added that as with all seasonal events, customers are waiting longer to do their shopping and said that with more schools opening later this year, overall business picked up at the end of the month.

Rival Target Corp.'s same-store sales fell 2.1 percent, though that was better than the 2.6 percent decline expected. Target also said in a pre-recorded call that back-to-school sales picked up speed late in the month. The cheap chic discounter hasn't fared as well as Wal-Mart in the weak economy as Target heavily emphasizes nonessentials such as home furnishings and trendy jeans.

Most mall-based apparel store chains that cater to young shoppers struggled.

Limited Brands, the operator of Victoria's Secret and Bath & Body Works, suffered a 7 percent drop in same-store sales, mostly in line with the 6.9 percent decline estimated.

Abercrombie & Fitch's 11 percent drop was worse than the 7.9 percent expected. Wet Seal recorded an 8.7 percent drop, steeper than the 7.5 percent forecast.

But Pacific Sunwear of California Inc.'s same-store sales fell 6 percent; Wall Street had expected a 8.8 percent decline. And on Wednesday, American Eagle reported a 5 percent dip in same-store sales, not as steep as the 6.5 percent decline expected.