Many retailers report lackluster sales for July; apparel chains hard-hit

NEW YORK (AP) _ Consumers' frugal spending extended into a second month during July, giving many retailers lackluster sales gains, particularly apparel chains like Gap Inc. <br/><br/>Analysts attributed

Thursday, August 5th 2004, 12:38 pm

By: News On 6

NEW YORK (AP) _ Consumers' frugal spending extended into a second month during July, giving many retailers lackluster sales gains, particularly apparel chains like Gap Inc.

Analysts attributed the disappointing sales to a variety of factors, including higher gasoline prices and the end of the mortgage refinancing boom. They said retailers should expect more of this downbeat trend going forward.

John Morris, senior retail analyst at Harris Nesbitt, said Wall Street was expecting a moderate recovery in July after June's sluggish sales.

``It throws some water on the view that June was just a hiccup, and bump in the road,'' Morris said. ``You now have two months in a row of lackluster sales. I think we are at a critical period for forecasting the health of retailers.''

The preliminary International Council of Shopping Centers-UBS sales tally of 70 retailers was up 3.3 percent, in line with forecasts. The tally is based on what the industry calls same-store sales, or sales at stores opened at least a year. Those sales are considered the best indicator of a retailer's performance.

While results were a bit better than the 3 percent gain recorded in June, they're still well below the average 6 percent increase recorded from January through May.

July is one of the least important months of the retailing year and is used by stores to clear out summer goods, but it nonetheless reflects consumer trends. Wall Street will be closely watching the critical back-to-school business in August and September.

Analysts said apparel chains were hurt by cooler than usual weather in the beginning of July.

Gap had a 5 percent decline in same-store sales, much worse than the 0.8 percent decrease Wall Street forecast. Total sales fell 3 percent.

Talbots., had an 8.8 percent decline in same-store sales, worse than the 0.3 percent forecast. Total sales were down 3 percent.

But teen retailer Pacific Sunwear of California announced a 6 percent gain in same-store sales, just short of the 6.2 percent forecast. Total sales rose 16.1 percent.

J.C. Penney Co. Inc. recorded an 8.1 percent gain in department stores, well past Wall Street's 3.2 percent estimate. Total sales were up 6.8 percent.

But Kohl's Corp. recorded a 4.2 percent decline in same-store sales, worse than the 3.9 percent forecast. Total sales rose 10 percent.

On the other hand, discounters had solid gains, not surprising given consumers' emphasis on frugality, and some high-end chains also did well.

Wal-Mart said it had a 3.2 percent gain in same-store sales in July, in line with the 3.1 percent forecast of Wall Street analysts surveyed by Thomson First Call. Total sales rose 10.9 percent.

At Target Corp., same-store sales were up 3.8 percent, better than the 2.8 percent gain that Wall Street projected. Total sales were up 8.8 percent.

Upscale Neiman Marcus reported a 16.6 percent gain in both same-store sales and total sales. Wall Street anticipated an 8.8 percent gain in same-store results.

Federated Department Stores posted a 3.7 percent increase in same-store sales, below Wall Street's forecast of 5.4 percent. Total sales rose 3.6 percent. May Department Stores had a 5.5 percent decline in same-store sales, below the 2.4 percent analysts anticipated. Total sales were down 5.3 percent.