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Back-to-School Spending Is Expected to Increase 19%

July 19, 2006|From Reuters

NEW YORK — The average family probably will shell out more for new clothing, electronics and dormitory supplies for the coming school season than in 2005, even as higher energy prices have crimped spending in other areas, according to a retail survey released Tuesday.

Soaring gas costs and uncooperative weather limited consumers' trips to the mall in June, but parents will not hold back when it comes to their kids, said Scott Krugman, a spokesman for the National Retail Federation, which commissioned the survey.

Demand for electronics in particular will drive spending, which is expected to increase 19% compared with last year, according to the survey of about 9,000 consumers.

That could be good news for one-stop shop retailers such as Target Corp. and Wal-Mart Stores Inc., which have reported slowing sales growth.

Big-box electronics companies, such as Best Buy Co. and Circuit City Stores Inc., could also benefit.

"When it comes to spending for their child, gas prices take a back seat," Krugman said. "The fashion and apparel merchandise that kids and parents are seeing, they like. And as the computer plays more of a role in the classroom, there's more of a need to have that equipment at home."

The retail group released the survey's findings on a day Target cut its July sales forecast and the S&P retail index hit a 14-month low as consumer-related shares tumbled on fears inflation and conflict in the Middle East would hurt consumer spending.

Still, spending by the average family with school-aged children is expected to rise 19% to $527 from $444 in 2005, according to the survey conducted for the retail group by BIGresearch from July 5 to 12.

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