U.S. Retailers Boost July Sales with Heavy Discounts and Promotions

NEW YORK, United States — U.S. retailers reported higher sales for July, but they relied heavily on discounts to lure cost-conscious shoppers who have remained frugal so far during the crucial back-to-school season.

Eleven retailers that still release monthly sales figures for stores open at least a year reported a combined 3.9 percent gain, missing the 4.4 percent increase analysts expected, according to Thomson Reuters.

The news came as retailers head into the crucial months of the second biggest selling period of the year.

The second quarter was characterized by higher promotions, weak traffic trends and a challenging retail environment, especially in July, teen apparel chain Aeropostale CEO Thomas Johnson said on Thursday.

The comments echoed those from rival American Eagle Outfitters which said the pressure to slash prices was intense in July. American Eagle reported a 7 percent drop in quarterly same-store sales.

Gap Inc reported a 1 percent rise in July same-store sales, missing analysts' forecast for a 1.7 percent increase.

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, Kohl's Corp and Macy's Inc. Those companies will report quarterly results later this month.

The Standard & Poor's Retail Index closed up 0.8 percent on Thursday, outpacing a 0.4 percent gain for the broad S&P 500.

MIXED BAG

Costco Wholesale Corp 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, a small discount chain, said promotions were what lifted same-store above expectations sales last month. Cato Corp, which sells clothing, reported a 5 percent decline that Chief Executive Officer John Cato blamed on "continuing economic uncertainty."

L Brands Inc, 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. It also raised its profit outlook for the second quarter

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

Walgreen Corp 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. Rival Rite Aid Corp reported a modest 0.7 percent increase in general merchandise such as toothpaste and deodorant.