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In results that came in stronger than many expected, same-store sales rose in August by more than 3 percent. The results are especially surprising since people just a few days ago were saying the back-to-school shopping season was turning into a big bust. However, it does appear that big discounts were part of what drove sales numbers, which means that retailer profits may not be as robust as you’d otherwise expect with the sales gains.

Heavy discounts during the back-to-school season, which were deeper than retailers had offered in years, drove healthy levels of traffic and sales. Tax-free holidays that were held in several states in August also provided an additional boost.

Major chain stores reported a 3.3% sales gain compared with a year earlier, according to Thomson Reuters’ tally of 27 retailers. Analysts had expected a more modest 2.5% rise. Sales rose in all categories including discounters, department stores and apparel chains. Two-thirds of retailers either beat or met expectations.

That was a relief after two years of sluggish back-to-school sales, but retail analysts and economists say retailers need to be prepared for what’s expected to be a highly competitive fall and another tough holiday season.

Retail Metrics said sales rose 3.5 percent while Kantar Retail recorded the gain as 3.4 percent and ICSC estimated that sales rose 3.2 percent.

ICSC’s tally shows that same-store sales rose 3.2 percent in August. Read the rest of this entry »