Retailers Show Best Results in a Year

By KAREN TALLEY Retailers delivered some of their best sales in almost a year, with apparel retailers and discounters benefiting from early back-to-school buying. But department stores continued to struggle last month. The showing prompted some analysts to say that July's big sales drop was the bottom of a downturn that began last fall and that has stubbornly stuck while other areas of the economy are improving. More Sortable Chart: From Abercrombie to Zumiez Real Time Econ: Back (Ordered) to School Still, a quick recovery isn't expected; half of retailers missed projections. Sales at stores open more than a year, a key measure of retailers' health, slipped 2.9% last month, marking the 12th consecutive decline. A 3.8% drop was expected by analysts surveyed by Thomson Reuters. The showing was the best since last September, but was skewed, coming in comparison with dismal year-earlier performance. The bottom started falling out for the industry in August of last year. Nevertheless, many of the retailers beating expectations did so comfortably, including Target Corp., Costco Wholesale Corp. and Gap Inc. With leaner inventories, companies are hoping to avoid the markdowns of last year's holiday season, when sales were even weaker than expected. August results also were hurt because the late Labor Day holiday delayed the start of some school sessions. Another likely impact was the "cash for clunkers" program, which may have steered some consumers away from retailers to car showrooms. Still, the sales decline was smaller than July's 5.1%, and comparisons will continue to get easier in the coming months. Target reported a smaller than expected 2.9% same-store sales decline. Traffic was essentially flat, "a meaningful improvement from second-quarter trends," said Chairman and Chief Executive Gregg Steinhafel. "We're pleased with these results, which we believe reflect the resilience of both our guests and our strategy in a challenging environment." TJX Cos. posted a same-store sales increase of 5%, while rival Ross Stores Inc. reported a 6% gain, both topping analysts' estimates, according to Retail Metrics. The off-price apparel retailers have been posting some of the best results of late and analysts in recent days had raised their forecasts sharply. Another bright spot was Gap. It posted a much smaller than expected 3% decline on a surprise 4% increase at the long-struggling Old Navy chain. Aside from Abercrombie & Fitch Co., many teen retailers did better than expected. Abercrombie posted a bigger-than-projected 29% decline. The company has seen big drops for months as price-conscious shoppers instead opted for less-expensive rivals like Aeropostale Inc. Aeropostale had record August results as sales rose 9%. The company raised its earnings forecast for the quarter. Department stores continued their woes. Macy's Inc. posted an 8.1% drop, while J.C. Penney Co. had a 7.9% decline. But Kohl's Corp. posted a surprise 0.2% increase, which was aided by strength in the accessories and women's departments. Wal-Mart Stores Inc. in May stopped reporting monthly sales data.