Retailers report disappointing July sales

Wal-Mart posted a 1.9 percent same-store sales gain, beating the 1.5 percent estimate of analysts surveyed by Thomson Financial. The company said it expects comparable store sales for the August period to be up 1 percent to 2 percent.

The discounting behemoth has been struggling recently to find its footing, after an unsuccessful attempt to offer trendier clothing and other items languished. The company has recently once again begun promoting its more traditional strategy of pushing deep discounts.

Analyst Ed Weller with ThinkEquity Partners said he thought the discounting might have been steeper in July than previously, but that the strategy is consistent with Wal-Mart’s long-term agenda.

“They’ve been doing this for 25 years — they’ve been lowering prices,” he said.

Weller said he thinks the company still does have an opportunity to offer some higher-quality products, but that they must do so within the framework of their traditional focus on offering the customer a good value.

The Bentonville, Ark.-based retailer said it was encouraged by early indications of how back-to-school offerings may fare, but executives warned said sales of its apparel and home decor items are expected to remain soft through early fall.

Wal-Mart is expected to report its quarterly earnings results on Tuesday.

Meanwhile, rival Target Corp.’s same-store sales rose 6.1 percent, above the 5.9 percent forecast. The smaller discounter has found success offering trendy “cheap chic” items such as dresses and quirky home decor.

Costco reported a 7 percent increase in same-store sales, exceeding the 5.5 percent estimate, while J.C. Penney posted a robust 10.8 percent gain in its department store business, above the 9.8 percent forecast.

Nordstrom Inc. reported that same-store sales rose 9.4 percent as the well-heeled customer continues to splurge.

Macy’s Inc. had a 1.4 percent decline in same-store sales for the month, in line with the 1.5 percent analysts expected.

Limited posted a 3 percent same-store sales drop, worse than the 0.5 percent forecast.

Gap Inc. fell short of expectations, posting a 7.0 percent decline in same-store sales. Analysts had forecast 4.9 percent drop.

Talbots only issued a second-quarter same-store sales report, which showed a 4.8 percent decline, prompting the retailer to say it will record a loss instead of a profit for the period. In a statement, Talbots said it believes that “its customers have become increasingly more discriminating regarding their discretionary spending.”

Teen retailers were hit hard, though many store executives blamed the tax holiday shifts in Texas and Florida as a major factor. According to John Morris, managing director at Wachovia Securities, Pacific Sunwear and Hot Topic Inc. have the biggest exposure to these markets among teen merchants, with 19.8 percent and 15.4 percent of their stores located in Florida and Texas, respectively.

Still, while the tax issue was a big factor, analysts acknowledge that it was puzzling to see how poorly teen retailers fared. Trish Walker, partner at Accenture’s retail practice, believes that young consumers are spending more of their dollars on consumer electronics like iPods, fancy cellphones and laptop computers.

Abercrombie & Fitch Co.’s same-store sales fell 4 percent, worse than the 0.7 percent expected. American Eagle Outfitters Inc. announced that same-store sales fell 6 percent; analysts expected a 2.9 percent increase.The company added that customers are responding well to the back-to-school collection.

Hot Topic had a 7.4 percent decline in same-store sales, worse than the 7.1 percent estimate.

Wet Seal suffered a 7.2 percent decline, worse than the 5.0 percent projection, while

Pacific Sunwear had a 4.6 percent slide; analysts anticipated a 3.2 percent gain. Bebe Stores Inc. posted a 6.3 percent decline, steeper than the 4.6 percent forecast.

-This story includes information from The Associated Press.

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