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Stores have a solid start to back-to-school season

By WTOP Staff

ANNE D’INNOCENZIO
AP Retail Writer

NEW YORK (AP) — The back-to-school shopping season is off to a promising start, but retailers may be sacrificing profit for sales.

The National Retail Federation expects the average family with school-aged children to spend $669.28 for back to school items, up 5 percent from last year. That would be the second-highest amount since the industry trade group started tracking spending in 2004.

But major retailers like Wal-Mart and Macy’s are discounting merchandise and increasing spending to upgrade their stores and websites just to grab the attention of U.S. shoppers during the second biggest shopping period of the year. All that discounting and investing has worked to start the season off strong, they say, but it also hurts their bottom lines.

“Stores are going to have to invest in price and e-commerce aggressively in order to be competitive,” said Ken Perkins, president of RetailMetrics LLC, a retail research firm. “The pie is not growing, and they’ve got to do everything they can to keep them from losing market share.”

Wal-Mart, the world’s largest retailer, says it’s been investing in several ways to attract shoppers this season. The company cut prices on 10 percent more back-to-school items compared with last year. It also increased the number of back-to-school products sold on its website by 30 percent to 75,000 this year from last year.

The company also has made some long-term investments. Wal-Mart said earlier this year it plans to open 270 to 300 small stores during the current fiscal year — double its initial forecast– to compete with dollar chains. And it has increased its spending on its e-commerce operations to compete with online competitors like Amazon, a move that contributed to it slashing its annual profit outlook.

“In an environment where customers have so many choices about where to shop and how to buy, and many of them are feeling pressure on their budgets, we have to be at our best,” said Wal-Mart’s CEO Doug McMillon in a pre-recorded call Thursday.

But all that investing has hurt its results. On Thursday, Wal-Mart reported that its profit in the latest quarter was virtually flat during the latest quarter.

Kohl’s Corp. also reported flat profit in its latest fiscal quarter on Thursday, as it cut prices, revamped its beauty departments, and spent on services such as one that enables it to ship online orders directly to shoppers from its stores.

The department-store operator also has started to roll out a loyalty program where shoppers get one point for every dollar they spend, with them receiving a $5 reward for every 100 points.

The retailer is hopeful its moves will boost business during the back-to-school shopping season: Kohl’s said that in July it had its first gain in revenue at established stores in several months.

“I believe our customers will be excited by the newness that they find in our stores and when shopping online this fall,” Kohl’s CEO Kevin Mansell told investors Thursday.

Still, Mansell says the period is not a predictor of how shoppers will spend during the winter holiday shopping season in November and December, which traditionally is the biggest shopping period of the year. “Last year, we had a really good back-to-school business and then business died mid-September,” he said.

For its part, Macy’s Inc., which owns Macy’s and upscale Bloomingdales chains, reported on Wednesday that its profit and sales for its latest quarter missed Wall Street estimates because it did so much discounting of merchandise.

The retailer also has been investing in its online business. The company said it just finished rolling out a program that allows shoppers to order on macys.com and then pick-up their order in stores. Additionally, the company said that it has sharpened its focus on customers ages 13 to 30, which has re-energized the back-to-school business.

“Macy’s and Bloomingdale’s are doing what it takes to win with the customer,” Karen Hoguet, Macy’s chief financial officer, told investors.

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Follow Anne D’Innocenzio at http://www.Twitter.com/adinnocenzio

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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