Originally created 08/08/03

Retailers report strong sales in July



NEW YORK -- Retailers finally got a break in July as warm weather and heavy discounting helped lift sales above expectations for many merchants, even the struggling department store sector.

As retailers reported their sales results Thursday, all industry segments appeared to benefit from an improved selling environment. Wal-Mart Stores Inc., the industry leader, boosted its profit outlook for the second quarter.

J.C. Penney Co. Inc., Kohl's Corp. and Gap Inc. were among the retailers that reported sales that beat analysts' forecasts.

Even May Department Stores Co., which has struggled with sales declines, eked out a solid increase in sales at stores open at least a year, surpassing analysts' forecasts. Sales at stores open at least a year, known as same-store sales, are considered the best indicator of a retailer's health.

"It was a good month, and it may be a good omen for the second half," said Michael P. Niemira, vice president of Bank of Tokyo-Mitsubishi Ltd. "Sure, the month was promotional and weather helped, but this could be the start of a much better trend."

Bank of Tokyo-Mitsubishi's same-store sales tally of 61 retailers was up 4 percent, well above the 3 percent gain Niemira had expected. That compares to a 2.6 percent increase in the year-ago period.

The pace is well above the sluggish 1.5 percent increase that had been seen from last August through April, although the last two months same-store sales improved slightly, averaging a 2.2 percent gain.

July - when retailers step up discounting to get rid of summer clearance and make room for fall goods- is one of the least important months in a retail sales calendar. Analysts are now closely monitoring August and September, which account for the critical back to school season.

Wal-Mart, which along with other retailers struggled with cooler than normal temperatures in May and June, said same-store sales were up 4.6 percent, well past the 3.7 percent increase predicted by analysts surveyed by Thomson First Call.

Wal-Mart's total sales were up 11.9 percent, driven by food, electronics, swimwear and pet supplies.

The discounter now expects earnings from continuing operations for the second quarter, ended July 31 to be around 52 cents per share. Analysts surveyed by Thomson First Call expected 50 cents per share. The retailer is slated to report earnings results on Wednesday.

May said its same-store sales rose 1.8 percent, while its total sales were up 4.5 percent. But Federated Department Stores Inc. did not fare as well, reporting same-store sales that decreased 0.4 percent and total sales that slipped 0.5 percent.

Selected same-store sales for July for other leading retailers:

-Abercrombie & Fitch, same-store sales were down 11 percent; total sales were up 6 percent.

-AnnTaylor Stores Corp., same-store sales were up 7.6 percent; total sales were up 15.7 percent.

- Gap, same-store sales were up 9 percent; total sales were up 12 percent.

- Kohl's, same-store sales increased 6.7 percent; total sales increased 21.4 percent.

- Penney, same-store sales were up 3.7 percent for its department store business; total sales were up 3.4 percent.

- Sears, Roebuck and Co., same-store domestic sales slipped 0.8 percent; total sales decreased 0.3 percent

- Target Corp., same-store sales increased 3.1 percent; total sales were up 10.9 percent.