July sales flat as school shopping season starts

In an ominous sign for the back-to-school shopping season, retailers ranging from Abercrombie & Fitch anf to J.C. Penney jcp reported dismal July sales Thursday as economic concerns trickled down even to once largely recession-proof young shoppers.

Consumers ages 18 to 26 report being harder hit by gas prices and more reluctant to buy clothes because of high fuel costs than do adults 27 and older, according to data provided to USA TODAY by BIGresearch.

"They may want to spend, but the cash tank is on E," says BIGresearch's Phil Rist. "When there's no money because it's in their car, they can't spend."

The National Retail Federation warns that back-to-school apparel sales will likely be flat this year. That trend was evident in July sales, as American Eagle aeo, Limited Brands ltd— which owns Victoria's Secret — Pacific Sunwear psun and other more youthful brands posted drops in same-store sales.

Another alarming signal came from Wal-Mart wmt, which projected Thursday that sales will slow in August, partly because of the fading effect of tax-rebate checks that had helped lift store sales earlier this year. The discounter, which BIGresearch says is where women ages 18 to 26 shop most often for clothes, said sales rose a less-than-expected 3%, largely because of slow apparel sales.

With higher gas prices, July same-store sales appeared to enjoy less of a boost from tax rebates, as more shoppers used rebates for food and gas than they did this spring, TNS Retail Forward says.

"The summer spike in fuel and food prices is causing shoppers to pare back their plans for tax rebates and back-to-school spending," says Frank Badillo, senior economist at TNS Retail Forward. "That's clearly squeezing spending on retail goods other than food and gas."

Some retailers popular with younger shoppers managed to defy the weak trends. Urban Outfitters urbn is thriving, along with Buckle bke, which posted a same-store sales increase of 20.9%, and Aéropostale, aro which reported an increase of 13%.

"When the times get tough, it separates the good and the bad," says Greg Maloney, CEO of mall management company Jones Lang LaSalle Retail. "That's what we're seeing right now."

Some remain optimistic about retailers that cater to younger consumers. Nita Rollins, a retail trends expert, says younger shoppers aren't likely to drastically change their shopping habits, because their "sense of history is very compressed."

Some of them even benefit from three sources of income: their parents, grandparents and their own jobs, says Rollins, a futurist at the digital marketing agency Resource Interactive.

That could bode well for retail sales, even in a recession, Maloney says: "The parents still want to make sure their kids get what they need and want."