Retail Sales Better Than Expected

Retailers logged sales that were generally better than expected in July as temperatures sizzled and shoppers picked up summertime bargains while cooling themselves in malls.

Overall, sales at established stores rose 3.5% to $49.3 billion, according to the International Council of Shopping Centers’ preliminary tally of 60 retail chains nationwide. That was better than the 2.5% gain that the group had expected but still slightly below this year’s average monthly performance of 3.8% through June.

“The last two months have been below the fiscal year-to-date trend,” said Michael Niemira, chief economist for the shopping center group. “It’s a bit of slowing. Not dramatic, but a bit of slowing.”

Depending on one’s perspective, the weather took much of the blame or the credit.

Last month was the fifth hottest July nationwide in 112 years, according to Weather Trends International.

“Who’s thinking about going into buy corduroy pants, wool sweaters and overcoats?” asked Marshal Cohen, chief industry analyst for market research firm NPD Group in Port Washington, N.Y.

But the heat also drew people to air-conditioned malls .

The good and bad news was split. Half of the companies monitored by Thomson Financial exceeded analysts’ expectations and 48% fell short. Two percent hit the mark.

The results came two days after teen retailers’ stocks tumbled after Hot Topic Inc.’s announcement that sales and traffic dropped significantly in its stores in the second half of July.

Teen retailers as a group posted fairly weak results as back-to-school selling got underway, but with some notable exceptions. Abercrombie & Fitch Co.was in line with expectations with a 3% comparable-store sales gain. American Eagle Outfitters Inc. posted a healthy 7% rise, 1.6 percentage points below analysts’ predictions. These same-store sales are important indicators for retailers because they include only stores open a year or more.

Los Angeles-based Guess Inc.’s shares soared 10% after the trendy apparel seller said Wednesday that its second-quarter earnings more than tripled and that July same-store sales jumped a better-than-anticipated 10.7%.

In one of the month’s strongest performances, Children’s Place Retail Stores Inc., which has more stores in California than in any other state, posted a 15% increase.

“We are also encouraged by the initial favorable customer response to our back-to-school offerings at both brands, and we are especially pleased with the continued strength at Disney Store,” Chief Executive Ezra Dabah said in a statement. The Secaucus, N.J., company operates more than 1,100 Children’s Place and Disney stores in North America.

Some California companies offered downbeat results.

San Francisco-based Gap Inc., the nation’s largest specialty apparel retailer, said same-store sales fell 4%.

The parent of 3,000 Gap, Old Navy and Banana Republic stores, which cut prices to move some items, also cut profit expectations for the second quarter. It now expects earnings of 13 cents to 15 cents a share, compared with the 22 cents a share that analysts were anticipating.

Surf and skate apparel seller Pacific Sunwear of California Inc., based in Anaheim, also lowered profit expectations for the quarter as it announced that same-store sales dropped 10.6%, far more than the 1.4% decline that analysts had expected.

Wal-Mart Stores Inc., the world’s largest retailer and parent of the Sam’s Club chain, landed in line with expectations by recording a 2.3% gain.

Competitor Target Corp. advanced 3.1%.

Department stores performed respectably, collectively logging a 3.8% gain. J.C. Penney Co.’s sales rose 4.9%, better than the 3% that had been predicted, while Federated Department Stores Inc.’s sales increased 3.3%, in line with expectations. Nordstrom Inc. edged past expectations with a 5.3% gain.

Economist Niemira is expecting this month to roughly mirror July, with a 3% to 3.5% sales increase.