'A lousy start'; Back-to-school shoppers wait for discounts.

• Author: D'Innocenzio, Anne
• Position: Business

Byline: Anne D'Innocenzio

NEW YORK -- Shoppers are holding off on back-to-school shopping, and those who delay long enough might be rewarded with some steep discounts from desperate retailers.

Revenue at stores open at least a year -- an industry measure of a retailer's health-- rose 3.5 percent in July, the slowest pace since March, according to a tally of 11 retailers by the International Council of Shopping Centers. The figure, which excludes drugstores, was below a 5.5 percent increase in June.

Costco Wholesale Corp., typically a strong performer, was among the retailers reporting disappointing figures.

Many stores were already offering discounts and other come-ons to get shoppers to spend on the new shipments of fall clothing that started flowing in mid-July. But experts say even more deals are coming this month as stores try to boost sales for the back-to-school season, which runs from mid-July through mid-September.

''It was a lousy start,'' said Walter Loeb, a New York-based independent retail consultant. ''There will be even more discounts to make up the sales.''

Ken Perkins, president of RetailMetrics LLC, a research firm, agrees.

''A vast number of shoppers are sticking to their shopping lists and are being very deal-driven,'' he said.

Only a sliver of retail chains now report monthly sales figures, and the list doesn't include Wal-Mart and many other large chains. But Thursday's tally adds to evidence that shoppers are being frugal about their purchases, particularly clothing. The back-to-school season is the second-biggest selling period behind the winter holidays.

On Monday, teen retailer American Eagle Outfitters Inc. slashed its second-quarter outlook because of weak traffic and sluggish sales of women's merchandise. The teen retailer cited a highly promotional environment that only got tougher in July.

On Thursday, rival Aeropostale Inc. warned that it would have a wider loss than expected when it reports its second-quarter results later this month. It also blamed weak traffic and lots of discounting.

A clearer picture of how the back-to-school season is faring will emerge next week when major retailers such as Wal-Mart Stores Inc. and Macy's Inc. report their second-quarter financial results. Analysts will dissect the outlooks merchants have for the fall quarter.

Overall, the back-to-school season faces a big challenge: Shoppers are shifting their spending away from clothing and toward bigger-ticket spending on their homes...