Clearance Sales Lured Shoppers to Boost Spending in July

Clearance Sale

NEW YORK -- Hot weather and clearance sales drew Americans into stores in July, giving retailers solid sales gains and helping offset worries about jobs and the economy.

Results came in better than expected for many retailers, an encouraging sign as the back-to-school season, the second-biggest shopping season behind the holidays, kicks off. Thomson Reuters reported early Thursday that three-quarters of retailers reporting results beat 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. He said colored denim is a key fashion trend that is new in stores and attracting customers. "Retailers were pretty aggressive with promotions, trying to clear out merchandise."

Analysts had expected modest gains in the month, as Americans slowly start to feel better about high unemployment and the bumpy global economy. On Tuesday, The Conference Board reported that its Consumer Confidence Index rose for the first time in five months. Still, that measure remains at historic lows, and is not expected to improve significantly until hiring picks up substantially. And a separate Commerce Department report Tuesday showed Americans spent no more in June than May, even though their income grew by 0.5 percent.

Only a handful of chains representing roughly 13 percent of the U.S. retail industry report monthly sales. Major chains that don't report include Walmart (WMT) and J.C. Penney (JCP). The figures are based on stores open at least a year and are a key measure of retailers' health because they exclude newly opened and closed stores. Economists watch the numbers because consumer spending accounts for 70 percent of U.S. economic activity.

Gap (GPS) was a surprise outperformer. Revenue in stores open at least a year rose 10 percent, handily beating expectations for a 3.8 percent gain. The figure rose 13 percent at Gap stores, 12 percent at Old Navy and 8 percent at Banana Republic.

Target (TGT) also performed well, with revenue in stores open at least a year up 3.1 percent in July, as more shoppers visited its stores. Analysts had expected the measure to rise 2.7 percent.

And Limited Brands (LTD), which runs Victoria's Secret and Bath & Body Works, said the revenue figure rose double what analysts expected. The company also boosted its second-quarter earnings outlook and declared a special dividend on Thursday.

Teen clothing sellers were mixed. Abercrombie & Fitch (ANF) late Wednesday said sales at stores open at least a year fell 10 percent. It also slashed its outlook for future earnings, including cutting second-quarter estimates to between 15 and 18 cents, about half of what analysts had expected. Wet Seal and Zumiez both missed expectations for July.

But Hot Topic (HOTT) and American Eagle Outfitters (AEO) both reported strong second-quarter results. American Eagle Outfitters on Wednesday raised its forecast for second-quarter earnings, saying that sales during the period were stronger than expected.

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Delaware Jack

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August 07 2012 at 1:08 PM Report abuse rate up rate down Reply

I am starting to not have faith in any of these reports. They don't tell the whole story. My problem with these sales reports is that they seem to assume that the only thing people want to do with their money is go shopping. Well, not everyone needs something all the time, some people are comfortable with what they got. Besides a lot of times you go in the store and there is nothing worth buying, it's overpriced, poor quality for the money etc...

August 05 2012 at 8:02 AM Report abuse rate up rate down Reply

Do you think this report was telling you that retail sales were up over all? NO' they were not. Another bending of the truth, because they think you are stupid. They are trying to say the sales would have been worse if stores didn't run clearance sales. The Economey is still terrible. The Liberal press is again peeing down your back trying to sell you that it is rain.

August 02 2012 at 5:56 PM Report abuse -1 rate up rate down Reply

Wonder if school starting the first week of August this year had anything to do with the increase in sales?

August 02 2012 at 5:03 PM Report abuse +1 rate up rate down Reply

No they didn't liars!
God make something up and call it news.
Gas prices were lower early in the month people had extra coins, lower gas prices and people spend imagine that. DUH! Takes a genius to figure that one out.

August 02 2012 at 4:32 PM Report abuse +1 rate up rate down Reply

It's really very simple, the prices keep going up for everything, but the income per person (who works) doesn't. Get the prices down, or you're going to be stuck with a lot of stuff you can't sell.

August 02 2012 at 1:56 PM Report abuse +1 rate up rate down Reply

Oh, so now it's hot weather and clearance sells? "You people" need to quit it. The Anti-Obama influence is so apparent, just like the report of 80,000 jobs in June with the revised number being 172,000. Must all of you take on the personna of hte closet bigot?

August 02 2012 at 1:34 PM Report abuse +1 rate up rate down Reply

Seems to me the Government stated that overall consumer spending was actually down 1.5% So, I'm wondering just how accurate and factual the data is in this article.

Who is one to believe these days? a writer of an article? or Government officials statements?

August 02 2012 at 10:17 AM Report abuse rate up rate down Reply
1 reply to bdzdean's comment

Good question, as both seem to be writers of fiction. Government reports have been amended months after the fact, now for some time, leading one to question an ulterior motive at play.

Shoppers didn't flock but waited out of desperation as discretionary income dries up. The other point in the article was the economy is 70% consumer spending. If nearly all items come from abroad it doesn't put monies into the hands of common workers here. My new slogan is " Buy American OR GOODBYE AMERICA "

August 02 2012 at 11:45 AM Report abuse rate up rate down Reply
1 reply to bikerdadbmw's comment

But America is owned by foreign countries, so buying Made in China/Japan helps America.
Maybe you should change your slogan to "But Assembled in America, or America will be assimilated", more fitting.

August 02 2012 at 4:37 PM Report abuse rate up rate down