Lower-priced U.S. retailers posted better-than-expected sales results in August as consumers looked to save money in the key back-to-school season, leaving luxury chains struggling.

It's really still a discounter's market and an off-price seller's market, said Ken Perkins, president of research firm Retail Metrics.

Consumers continued to favor retailers like Aeropostale Inc and TJX Cos' T.J. Maxx over higher-priced sellers like Abercrombie & Fitch Co and Neiman Marcus .

Gap Inc reported better-than-expected sales at stores open at least a year, falling only 3 percent and helped by a 4 percent increase at its lower-priced Old Navy chain. The company's shares were up 5.4 percent in morning trading.

Most retailers still reported lower sales at stores open at least a year as the late Labor Day holiday hurt August results, but was expected to help in September.

Same-store sales fell an average of 2.9 percent at the 30 retailers tracked by Thomson Reuters, better than the 3.8 percent decline analysts had forecast.

Half of the retailers missed analysts' expectations, and 46 percent beat them.

Uncertain job prospects, ravaged retirement savings and lower home values also left analysts cautious in their expectations for the holiday season, although they see some improvement after retailers were hit over the past year by the worst recession since the Great Depression.

Holiday sales are definitely going to be soft, but it's not going to be the bombshell that was dropped on retailers last season, Perkins said.

BUYING FOOD AND SUNDRIES

Costco Wholesale Corp , the largest retailer that still reports monthly sales, beat analysts' estimates. It posted only a 2 percent decline in sales at stores open at least a year, rather than the 5.7 percent drop analysts expected, according to Thomson Reuters data, and its shares rose 8.6 percent.

Food and sundries were the best sellers, while consumers continued to hold back on discretionary spending, Costco said.

Overall, the sales view is distorted by the shift of the U.S. Labor Day holiday -- which falls on the first Monday in September -- to September 7 in 2009 from September 1 in 2008. That means seven more pre-Labor Day selling days, including the entire holiday weekend, will be in the September sales reporting month this year. Last year, the Saturday of Labor Day weekend fell in August.

Gone are the days of pre-Labor Day shopping, Wall Street Strategies analyst Brian Sozzi said in a research note. Consumers are waiting right up to the holiday weekend to capture the best deals for early fall merchandise for themselves and their children.

Children's Place Retail Stores Inc

, which sells kids' clothes, reported a worse-than-expected 8 percent decline in August sales. Analysts were expecting same-store sales to decline 3.3 percent, according to Thomson Reuters data.

Also showing weakness on the apparel side was teen retailer Hot Topic Inc , which had an 8.1 percent decline, while analysts had called for a drop of 6.9 percent. Accessories and women's clothing were among the worst performers at the company's namesake stores.

But Target Corp's same-store sales fell only 2.9 percent, compared with the analysts' average estimate of a 5.1 percent decline, and the discounter's shares rose 3 percent.

Conversely, Macy's Inc , which operates its namesake stores and higher-end Bloomingdale's, posted a worse-than-expected 8.1 percent decline, although its shares also rose.

Costco, Target and Walgreen Co -- which missed expectations on Wednesday -- are the three largest retailers that now report monthly sales after industry leader Wal-Mart Stores Inc decided earlier this year to only report them on a quarterly basis.

The absence of Wal-Mart data means the economic view that monthly sales data provides is less complete.

But analysts still watch the reports, not only as a scorecard for individual companies, but also as a barometer of spending by consumers, which accounts for roughly 70 percent of U.S. economic activity.

Some of the impact from the later Labor Day was muted by a shift of some states' sales tax holidays into August from July, analysts said.

(Additional reporting by Jessica Wohl in Chicago, Lisa Baertlein in Los Angeles, Aarthi Sivaraman in Seattle and Chakradhar Adusumilli in Bangalore; Editing by Lisa Von Ahn).

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