Wal-Mart, other retailers benefit from stimulus

Even merchants not normally known for discounting appeared to be more aggressive than last year as fears about the economy have dragged consumer confidence to the lowest level in 40 years. Barneys New York is offering up to 75 percent off on designer merchandise, while Banana Republic has discounts of up to 60 percent.

Perkins said the discounts have generally been planned well in advance and stores have been prudent about keeping lean inventory, so second-quarter earnings results shouldn't be a disaster.

But they are likely to be weaker. Perkins estimated that second-quarter profits for the 130 companies he tracks are expected to be down 5.6 percent, compared to the 6 percent increase expected at the beginning of the year.

"People are being way more picky" about clothing purchases, said analyst Jennifer Black.

Department stores, others struggle
Shoppers also are trading down to less expensive stores, benefiting Wal-Mart and other low-price operators and making it difficult for department stores and others.

Among department stores, J.C. Penney Co. posted a 2.4 percent decline in same-store sales in June, a bigger drop than the 1.1 percent decline that analysts had expected.

Upscale Nordstrom Inc. reported an 18.6 percent decline in same-store sales, matching analysts' estimates, and warned it may not meet its second-quarter earnings forecast.

Some clothing chains appeared to get some relief from the rebate money.

Children's Place Retail Stores Inc. said same-stores sales rose 16 percent in June, more than double analysts' estimates. Wall Street had expected same-store sales to rise 7.8 percent.

But Limited posted a 9 percent decline in same-store sales, worse than the 7.4 percent decline that analysts had expected.

Gap reported a 7 percent decline in same-store sales, though the results were better than the 11.6 percent decrease that Wall Street had expected.

The results left some analysts pessimistic. Morningstar analyst Joseph Beaulieu told Reuters there was some disappointment that the tax rebates, which totaled about $110 billion, really only helped the discount chains and not a wider swath of the sector.

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