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Despite a sluggish economy and record blistering heat across the nation, discounts and air conditioning drew American shoppers into stores as several retailers posted better-than-expected results for July.
Ahead of the back-to-school shopping season, overall same-store sales at U.S. retailers, excluding drugstores, increased 4.6 percent last month, compared to the same period a year earlier. The results beat analysts’ expectations of 3.1 percent growth, according to Reuters. “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.
One of the biggest surprises on growth included Gap (NYSE:GPS). The company reported that sales increased 10 percent in July, easily beating estimates of only 3.8 percent. Gap’s American focused businesses allowed it to avoid the European debt crisis currently taking place. All three of its North American brands witnessed strong growth. Sales grew at Gap Stores, Old Navy and Banana Republic by 13 percent, 12 percent and 8 percent, respectively.
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Other retailers such as Target (NYSE:TGT) and Macy’s (NYSE:M) also reported higher-than-expected sales growth, but both mentioned poor economic conditions. Sales at Target increased 3.1 percent, compared to estimates of 2.7 percent. Meanwhile, Macy’s posted 4.1 percent growth when 3.2 percent was projected. Target CEO Gregg Steinhafel said the beat came amid “a consumer environment that remains quite challenging.” Macy’s CEO Terry Lundgren also noted, “Despite some challenges from a sluggish macroeconomic environment and a temporary disruption of sales from the remodeling project at our Herald Square flagship store in New York City, the spring season met our expectations.”
Although many reported impressive figures, some retailers were torn to shreds on dismal results. Aeropostale (NYSE:ARO) and Abercrombie & Fitch (NYSE:ANF) shares plunged 32.75 percent and 14.58 percent on Thursday. Aeropostale lowered its full-year outlook and now expects to only break even, after originally predicting earnings of 3 cents to 5 cents per share. Abercrombie also lowered its profit guidance for the year to a range of $2.50 to $2.75 per share, well below the previous estimate of $3.50 to $3.75 a share. While J.C. Penney (NYSE:JCP) does not provide monthly sales figures, the company still closed more than 2 percent lower as Fitch downgraded its credit rating on the company.
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