Mixed bag for retailers in July: Discounters shine, teen retailers disappoint

NEW YORK — Many retailers reported better-than-expected results in July as warm weather and clearance sales drew shoppers into stores. Thomson Reuters reported that three-quarters of retailers reported results beat expectations. Costco Wholesale Corp., Target Corp., Limited Brands and Gap Inc. all reported gains above expectations.

“Hot weather and summer clearance, coupled with some newness in stores in the back half of the month, is leading to a nice upside heading into back-to-school," said Ken Perkins, president of RetailMetrics, a research firm, in an Associated Press report. "Retailers were pretty aggressive with promotions, trying to clear out merchandise."

July is considered a transitional month as retailers shift from summer merchandise to back-to-school and fall apparel. Sales are often the year's second smallest, behind January.

On the apparel front, Limited Brands posted a 12% increase in July same-store sales, topping the 6.2% average estimate.

Gap Inc. said that July same-store sales jumped 10%, easily surpassing analysts' expectations. The metric rose 13% at Gap stores, 12% at Old Navy and 8% at Banana Republic.

“We are pleased with our second quarter sales performance and the continued positive trend we’re experiencing in North America,” said Gap CEO Glenn Murphy.

Teen retailers had mixed results. Abercrombie & Fitch said its July same-store sales fell 10%. It also slashed its outlook for future earnings.

The Wet Seal and Zumiez Inc. also missed expectations in July. Wet Seal Inc., which fired its CEO last month, said that its same-store sales fell 15.6% for July, more than Wall Street analysts expected.

"We believe the company's performance in recent quarters is due in part to a move away from some of our fast fashion merchandising practices at Wet Seal that had been successful in the past," said Hal Kahn, who took the reins after McGalla was fired last week. “We are taking immediate steps to return key elements of our prior core strategy … which we may have lost during the past year.”

Zumiez said its same-same sales in July rose 7.5%. Analysts were expecting growth of 8.5%.

But Hot Topic and American Eagle reported strong second-quarter figures. Hot Topic’s sales rose 3.9% in the second quarter, and it forecast a narrower second-quarter loss than previously expected.

The Buckle, a perennial gainer, continued a less-than-stellar comps trend by posting a 0.1% drop in same-store sales, although still beating the 1.2% forecasted drop.