Favorable U.S. Retail Figures Expected Thursday

U.S. retailers are expected to report higher monthly sales in August, even though consumer confidence sagged and Hurricane Irene disrupted shopping along the East Coast during a key back-to-school weekend.

U.S. chain stores are expected to post a 4.6 percent gain in August sales at stores open at least a year, or same-store sales, based on analysts' expectations of sales at 25 retailers tracked by Thomson Reuters. Most report their sales data Thursday.

The tally includes warehouse club operator Costco Wholesale Corp, department store chain Nordstrom Inc and clothing seller Gap Inc, and speaks to the strength of consumer spending, which accounts for roughly 70 percent of U.S. economic activity.

August is the peak of the back-to-school shopping season, the second most important period for U.S. retailers after the year-end holiday season. Sales in recent months have held up despite weak economic indicators, offering hope of consumer resiliency in August and the rest of the year.

If August continues as June and July did, I think that could bode well for a solid (year-end) holiday. I'm not saying that we're going to have a blow-out holiday, but a solid holiday, said Madison Riley, managing director of retail consulting firm Kurt Salmon.

The holiday shopping season, which traditionally starts the day after the U.S. Thanksgiving holiday, can make up as much as 40 percent of a retailer's annual revenue.

Hurricane Irene, which hit a wide area from North Carolina up to Vermont, essentially shut down malls during the last weekend of August, hurting sales of traditional back-to-school items like clothes, shoes and electronics.

Macy's Inc and J.C. Penney Co Inc were among the many chains forced to shut stores in the New York area.

The storm's impact is clearly a wild card heading into Thursday's reports, said Ken Perkins, president of Retail Metrics.

Apparel retailers are expected to show the smallest sales gains in August, according to Thomson Reuters data. A glut of unsold merchandise could lead retailers to offer discounts to clear it, which could hurt quarterly profit margins.

By contrast, discount chains and drugstores are expected to show the biggest increases, helped by hurricane-related sales of things like batteries and bottled water. Walgreen Co, the biggest U.S. drugstore chain, will not report its monthly tally until next week, leaving investors to wait and see just how well that sector did.

The storm's full impact on monthly sales will not be felt until September's monthly report, since many retailers' August reporting periods ended on Saturday.

(Reporting by Martinne Geller and Dhanya Skariachan, editing by Bernard Orr)