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A Sparkling July for Some

Discounters, specialty chains report higher sales

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Several major U.S. retailers reported stronger-than-expected July sales, crediting warmer weather and heavy discounting at the start of the back-to-school shopping season for the uptick.

Discount chains, led by industry giant Wal-Mart Stores Inc. (Bentonville, Ark.), posted better-than-expected numbers. Wal-Mart said July sales at stores open at least a year — a key retail measure also known as same-store sales — rose 4.6 percent in the month ended August 1.

Wal-Mart traced the sales boost to “seasonally correct temperatures, clearance sales, easier comparisons, and also benefited from change in the tax withholding tables under the president's stimulus plan.”

Wal-Mart last month began offering customers the option to cash their tax-rebate checks at any of its Wal-Mart and Sam's Club stores for free. Wal-Mart said 15 percent of the checks cashed in its stores thus far were spent in the stores. That's down from 25 percent two years ago when households also received rebate checks.

Some high-profile specialty retailers also saw higher sales. For example, at Limited Brands Inc. (Columbus, Ohio), July same-store sales rose 2 percent, as strong results at Victoria's Secret and Bath & Body Works offset declines in its apparel group. And Gap Inc. (San Francisco) continued its rebound, with July same-store sales rising 9 percent. Gap said customers responded well to its July summer promotional and clearance sales, and to transitional fall merchandise.

But not everybody enjoyed increased sales. Federated Department Stores (Cincinnati), parent of Macy's, Bloomingdale's and several other chains, logged a 0.4 percent drop in July. However, Federated did raise its second-quarter earnings guidance, pointing to stronger-than-expected sales and tighter inventory.

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Same-store sales were also down at Sears, Roebuck & Co. (Hoffman Estates, Ill.), where the decline in July was 0.8 percent. Sears said it expects August same-store sales to be flat compared with a year ago.

Industry analysts note that July is typically a transitional month for retailers, who work to pare down inventory to prepare for the fall merchandise. Consequently, August is often the lead indicator on how the rest of the season will turn out for retail sales.

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