August 8, 2013 / 12:39 PM / 5 years ago

U.S. same-store sales rise in July, helped by promotions

(Reuters) - A group of large U.S. retailers on Thursday reported higher sales for July, but they had to use discounts to lure cost-conscious shoppers, raising concerns about the current back-to-school season.

Ten of the 11 U.S. retailers that still release monthly sales figures for stores open at least a year reported a combined 4.2 percent gain, just below the 4.4 percent increase analysts expected, according to Thomson Reuters. Gap Inc (GPS.N) will report after markets close.

The Standard & Poor’s Retail Index .RLX. was up 0.4 percent in morning trading, outpacing a 0.1 percent gain for the broad S&P 500 .SPX.

Retail stocks took a hit earlier this week after American Eagle Outfitters Inc (AEO.N) said the pressure to slash prices was intense in July and that quarterly same-store sales fell 7 percent.

Costco Wholesale Corp (COST.O) said on Thursday that same-store sales rose 4 percent last month, below analysts’ expectations of a 5.1 percent increase. Gasoline, which its members can buy at lower prices, sold well, but shoppers pulled back on big-ticket items like electronics.

Fred’s Inc (FRED.O), a small discount chain, said promotions were what lifted same-store above expectations sales last month. Cato Corp (CATO.N), which sells clothing, reported a 5 percent decline that Chief Executive Officer John Cato blamed on “continuing economic uncertainty.”

L Brands Inc LTD.N, the parent company of Victoria’s Secret and Bath & Body Works, was a stand-out, reporting a same-store sales gain of 3 percent for July, above forecasts for a 1.5 percent rise. Its shares rose 5 percent after it raised its profit outlook.

But shoppers remain stressed and are hunting for deals, experts said. Last month, U.S. employers slowed their pace of hiring, with the number of jobs outside the farming sector increasing less than economists expected.

“Consumers need a reason to go to the store,” said Barbara Kahn, a professor of the Wharton School of Business and director of the Jay H. Baker Retailing Center. “It’s consistent with what we’ve been seeing from economic data: The recovery is sluggish.”

International Council of Shopping Centers Chief Economist Michael Niemira said consumers had started their back-to-school shopping later this year than in 2012. That may mean a lot of goods remain unsold at the end of the season, he added.

Back to school is the second-most important season for clothing retailers after the Christmas holidays and is particularly important for teen chains as well as department stores like J.C. Penney Co Inc (JCP.N), Kohl’s Corp (KSS.N) and Macy’s Inc (M.N). Those companies will report quarterly results later this month.

Zumiez Inc (ZUMZ.O), which caters to teenagers, reported a weaker-than-expected 0.8 percent gain in July same-store sales. Rival chain The Buckle (BKE.N) had a 2.1 percent increase, slightly below Wall Street projections.

American Apparel Inc APP.A posted an 8 percent rise.

Walgreen Corp WAG.N said last week that its same-store sales rose 6.3 percent, but a Credit Suisse analyst said they had gotten help from deals on products like bottled water and soda aimed at bringing more shoppers.

Rite Aid Corp (RAD.N) reported a modest 0.7 percent increase in general merchandise such as toothpaste and deodorant.

Reporting by Phil Wahba in New York; Editing by Lisa Von Ahn

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