Teen-oriented retailers posted hit-or-miss results, with those showing the right fashions like paint-washed jeans reporting huge July sales gains. But some of the biggest names, including Gap, Limited Brands (LTD) and Abercrombie & Fitch Co. (ANF) missed Wall Street forecasts.
Overall, analysts expected July sales at stores open at least a year -- a key measure known as same-store sales -- to rise about 4.2 percent from a year earlier. That would be a drop-off from June's sizzling gains, when same-store sales rose a bigger-than-expected 5.4 percent.
Wal-Mart Stores Inc. (WMT), the world's biggest retailer, was among the few companies reporting better-than-expected results, helped by hot weather that drove sales of air conditioners, and a busy hurricane season that prompted people in stricken regions to stock up on food and other supplies.
But analysts said the heat wave that engulfed much of the United States last month may have backfired for clothing retailers because customers were more interested in shorts and T-shirts from clearance racks than full-priced fall fashions.
Consultants SDI Weather Trends said this July is expected to rank in the top 10 hottest in 111 years.
July is usually quiet for U.S. retailers, accounting for the smallest portion of their fiscal second-quarter sales. However, it is considered an early indicator of back-to-school demand, which peaks in August.
Back-to-school is the second-biggest shopping period behind the November-December holiday sales season.
Wal-Mart confirmed a preliminary forecast that July same-store sales rose 4.4 percent, toward the high end of its expectations and slightly better than Wall Street had predicted.
Analysts are watching Wal-Mart results particularly closely as gasoline prices soar, putting pressure on household budgets. Steep energy prices hit low-income shoppers particularly hard, but analysts said consumer spending has shown remarkable resilience.
J.C. Penney said the west and southeast were its strongest regions -- both areas where schools resume early and back-to-school demand tends to be strong in July. Overall, its July same-store sales rose just 1.6 percent, missing Wall Street expectations for a 2.7 percent gain.
Federated's July same-store sales fell 0.9 percent, well short of the 0.9 percent increase analysts had predicted. The retailer called the results "disappointing" but gave no reason for the shortfall.
Nordstrom's same-store sales rose 3.6 percent, below expectations for a 5.4 percent increase in a month that included a major clearance sale.
Teen-oriented retailers including Wet Seal Inc. (WTSLA) and Abercrombie & Fitch Inc. posted big double-digit sales gains, but Abercrombie's 22 percent increase fell short of expectations for a 28.2 percent increase.
Gap and Limited missed forecasts, however, with Gap reporting a surprising 4 percent same-store sales decline versus expectations for a 1.2 percent increase. Limited, which reported a slim 1 percent same-store sales gain, singled out weakness at its Express chain, which is aimed at teens and young adults.