NEW YORK (
) -- Will back-to-school go to the bears or the bulls?
While recent sales data would suggest shoppers are hesitant to open their wallets, expectations are high, with at least two research firms predicting record results.
The International Council of Shopping Centers is forecasting a 5.4% surge to $38.4 billion for the July-to-September period. This follows a 2.8% decrease in 2009 back-to-school period and 0.4% slip in 2008, and would mark the biggest back-to-school gain since 2005, when retailers saw a 6.4% surge.
Aeropostale CEO Aims For Back-To-School Win
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The National Retail Federation also predicts American families will spend $606.40 on average for back-to-school, topping $600 for the first time ever. This would be a 10.5% increase over last year.
Of course, after coming off one of the worst back-to-school periods since World War II, there's nowhere else to go but up, said Craig Johnson, president at Consumer Growth Partners. With such depreciated numbers last year, any major jump this season shouldn't really be read as a retail recovery.
The biggest question marks concern pricing and inventory levels. After restocking inventory, many retailers were forced to resort to heavy discounts during the spring selling period, which helped buoy sales at some companies. But will shoppers now be willing to pay full price?
It looks like they may not have to, as analysts observe
falling ticket prices
across the board. Already in the first-half of July, 50% of retailers were more promotional than last year, UBS analyst Roxanne Meyer wrote in a note.
While this is a plus for shoppers, it could hurt retailers who are relying on back-to-school to boost revenue and profit.
Retailers already placed a majority of their fall and holiday orders by the end of June, based on the lead times in the industry. "Most companies have planned their inventories to grow in-line with sales, which were showing improving trends at the time that these decisions were being made," Citi analyst Deborah Weinswig wrote in a note. "As a result of tepid sales in May and June, we believe that retailers' inventory positions could be slightly above plan currently. We expect retailers to focus on clearing through end-of-season goods in time for their back-to-school receipts in late July/early August, potentially with unplanned promotions."
So how do investors figure out which retailers will pass the back-to-school season with flying colors? "The winners for back-to-school will be whoever can chase demand most efficiently," said Majestic Research analyst Chandi Neubauer.
In light of all this, which retail stocks will most likely head to the top of the class, and which are at risk of falling behind? Click below to see...
-- Written by Jeanine Poggi in New York
>>Which Retail Stock Will Win Back-to-School?
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