Retailers Report Solid Sales in July
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By THE ASSOCIATED PRESS
Published: August 3, 2006
Filed at 10:14 a.m. ET
NEW YORK (AP) -- Worried retailers got a reprieve in July, scoring solid sales gains as searing heat in much of the country sent consumers back into the stores in search of summer clothes. But the outlook for the back-to-school season remained uncertain as higher gasoline prices and rising interest rates are still expected to challenge shoppers.
As retailers reported their sales results early Thursday, stores that pleased Wall Street included Wal-Mart Stores Inc., Limited Brands Inc., Nordstrom Inc. and J.C. Penney Co. Inc. Many companies catering to teens, including Bebe Stores Inc. and Wet Seal Inc. did well, helped by such back-to-school fashion trends as skinny jeans and walking shorts that hit stores late last month.
There were a few stragglers like Pacific Sunwear of California and Gap Inc., which has struggled with the right fashion formula for months.
''Things look good. Clearly, teens are shopping. I feel like the consumer is looking backward and still seeing good times,'' said Richard Jaffe, a retail analyst at Stifel Nicolaus, noting shoppers are still relishing in solid job security.
According to Thomson Financial's tally of retailers that had already released their results, 20 beat estimates, one met expectations and 18 missed forecasts.
July, one of the least important months in the retail calendar, is a time when stores are clearing out summer goods to make room for fall merchandise. But the month's solid performance was comforting for retailers who suffered a disappointing June.
Still, worries are high among the nation's retailers about the resilience of the consumer who's faced with a barrage of concerns from a slowing housing market to war in the Middle East that has driven the price of oil higher. While a solid job market helped lift consumer confidence last month from June levels, a recent batch of reports indicate that the economy is showing the effects of shoppers' financial juggling.
Last week, the Commerce Department said economic growth slowed dramatically during the second quarter, hurt by the housing market and a decline in consumer spending. And while the government reported Monday that personal income grew in June, the increase was not enough to lift the personal savings rate out of negative territory, where it has been for 15 straight months.
Economists are closely watching the job market, which has slowed down since spring but still remains healthy. On Thursday, the Labor Department reported that the number of new people signing up for unemployment benefits climbed by a seasonally adjusted 14,000 to 315,000 last week. Still, the results pointed to decent conditions in the job market.
Among retailers who announced their sales early Thursday, Wal-Mart had a 2.4 percent gain in same-store sales, or sales at stores opened at least a year. Same-store sales are considered the best indicator of a retailer's health. The results were above the 2.2 percent estimate of analysts surveyed by Thomson Financial.
Wal-Mart's performance in July was a little better than the disappointing 1.2 percent gain in June, but executives remain cautious about their core customer, who is vulnerable to rising gasoline costs.
''Our customers continued to prioritize spending on food and consumables and they responded early to price breaks for essential back-to-school supplies,'' said Tom Schoewe, executive vice president and chief financial officer of Wal-Mart, in a statement.
He said company did well with school supplies and fashion basics like screen T-shirts, denim and shorts.
Costco Wholesale Corp. posted a 7 percent gain in same-store sales, above the 6.8 percent increase from analysts.
Nordstrom posted a same-store sales increase of 5.3 percent, exceeding Wall Street forecast of a 4.5 percent gain.
Penney posted a 4.9 percent gain in same-store sales in its department store business, above the 3.0 estimate. The company reported all merchandise divisions had sales gains, with family shoes, women's accessories and men's apparel having the best performance.
The company said in its release that despite a solid start to the back-to-school season, it continued to take a cautious'' approach toward its future outlook given macroeconomic conditions.
Limited Brands had a 5 percent gain in same-store sales, also beating the 4.5 percent projection.
Gap had a 4 percent decline in same-store sales, better than the 3.8 percent forecast.
Teen retailer Bebe had a 10 percent same-store sales gain, well exceeding the 4.0 percent analysts expected.
Wet Seal enjoyed a 6.4 percent gain in same-store sales, above the 2 percent estimate.
Pacific Sunwear, however, suffered a 10.6 percent drop in same-store sales, well below the 1.4 percent Wall Street anticipated.
On Wednesday, American Eagle Outfitters Inc. announced a 7 percent increase in same-store sales, helped by what the company described as a favorable response to its back-to-school assortment and continued momentum of the American Eagle brand.
The results came in below the 8.6 percent estimate from Wall Street. Still, the company raised its second-quarter earnings outlook based on a solid July performance.
Hot Top Inc. said Wednesday that same-store sales dropped 7.2 percent, worse than the 0.7 percent decline analysts projected. |
