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After weak June, retailers to sweat out summer

By Anne D'innocenzio

Associated Press

Published: Thursday, July 5 2012 2:11 p.m. MDT

Against this backdrop, ICSC's Niemira expects a modest 2.5 percent increase in total back-to-school sales from mid-July through mid-September. If that happens, the result would be lower than last year's 3.6 percent increase and the 5.4 percent gain in 2010. But it would be a big improvement over the 4 percent drop in 2009.

Overall, June's revenue results were lopsided, with discounters and luxury stores faring better than mall-based clothing merchants catering to low to middle-income shoppers.

Costco's revenue from stores open at least a year rose 3 percent but fell short of the 3.7 percent estimate from analysts polled by Thomson Reuters. Target's had a 2.1 percent increase as shoppers spent more on food and health and beauty items. That was slightly lower than the 2.4 percent rise analysts expected.

Among department stores, Macy's, traditionally a strong performer, reported a slim 1.2 percent gain.

"In part, this was a function of a macroeconomic environment that is stagnant at best, and lower spending by tourists in cities such as New York," said Terry Lundgren, CEO of Macy's. He added sales were also slowed by the renovation of Macy's Herald Square store in Manhattan, which is creating more disruptions than expected.

Kohl's sales fell a worse-than-expected 4.2 percent in June, as the department store chain is trying to build back its inventories after reducing them too much earlier in the year.

A deteriorating economy could add to the woes at rival J.C. Penney, which is getting rid of hundreds of sales in favor of everyday low prices. The company, which no longer reports sales on a monthly basis, reported an almost 20 percent drop in revenue at stores opened at least a year for the first quarter.

Among teen retailers, The Wet Seal reported 9 percent drop, bigger than the expected 7.7 percent decline.

Not everyone had disappointing results.

Strong performances at Ross and The TJX Cos., which operates Marshalls, T.J. Maxx and Home Goods, underscored that shoppers' have a strong appetite for brand names at bargain prices. Both Ross and TJX posted a 7 percent gain in revenue and raised their profit outlook.

Luxury chains Nordstrom and Saks also fared well, easing fears that the affluent could pull back because of big swings in the stock market. Nordstrom notched an 8.1 percent increase, up from the 5.3 percent pace in May. Saks had a 6 percent gain, up from a 4 percent gain in May.

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