NEW YORK CITY-Back-to-school might not mean a return to sales increases at teen-oriented retailers, predicts a research report by New York City-based investment firm Cowen & Co. Despite the proliferation of tax-free shopping events and an extra week in July because of a calendar shift, sales increases “will be modest at best” in the second quarter.

Because of a 53-week fiscal year, chains including J.C. Penney, American Eagle and Guess have predicted that some third-quarter sales will shift into the second quarter. But recent weakness in mall traffic, and macroeconomic factors such as the slumping housing market, and rising interest rates and energy costs also could serve to suppress sales, particularly for retailers with less clearly defined brands.

“We anticipate that the Q2 benefit from the fiscal calendar shift will be modest at best,” the report said, “even after considering the benefit from more tax-free shopping events in this year’s July quarter.”

A number of states are offering tax-free holidays in July, which should boost sales. In fact, this year will see 23 days of tax-free shopping, compared with eight days last year. But a number of markets will begin their school years much later vs. the fiscal calendar than last year, due to the 53-week calendar shift. That could nullify any gains, the report said.

History also isn’t helping. Retailers made a “significant” miscalculation on spring break’s impact on March and April sales, underestimating how much of spring sales would be pulled forward into March. Add in bad weather, and sales also were well below expectations in April, the report said. Specialty retailers with a large back-to-school business have underperformed the market in June and July by an average 8.1% in 10 of the last 15 years, it noted.

However, sales lost in the third quarter could be recouped in the third, the report notes.

“While we don’t necessarily view this as the most robust environment for the consumer, we think many investors are confused regarding the impact from the fiscal calendar shift,” the report said. “This uncertainty, coupled with the potential for near-term lackluster data points, may lead many investors to conclude that the health of the consumer is deteriorating.”

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