Scorching June for Chain Stores

Target, Kohl's, J.C. Penney and Costco report blowout comps.
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Hot weather in June sent consumers to malls and chain stores in droves, making it the best month in a year for retail, according to monthly sales returns reported Thursday.

The International Council of Shopping Centers reported that overall same-store sales, a key metric measuring sales at stores open at least a year, rose 5.3% in June from a year earlier, based on a survey of more than 70 chains. That marks the strongest monthly growth rate since May 2004, when the ICSC's overall tally of sales showed a 5.7% gain.

"We saw basically a broad-based improvement at retailers in June," said Michael Niemara, ICSC's chief economist and director of research.

In explaining the strength, Niemera downplayed improvements in economic conditions, insteady citing weather and easy comparisons. In June 2004, same-store sales increased just 3% -- the weakest month of the year at that point.

"That was a key arithmetic reason for this uptick," Niemera said. "A fundamental reason, albeit a transitory one, was the weather. Weather turned much more favorable for seasonable goods in June, particularly in the Northeast. Last year it was colder than normal in June. However, the underlying economy did show some improvements in wage growth and consumer confidence, although that's still a mixed picture."

Richard Hastings, a retail analyst with Bernards Sands, said he expects the consumers to show sustained strength into the summer.

"The outburst of sales was enjoyed at many chains, especially low-overhead specialty retailers where the huge surge in comps overwhelmed ordinary payroll and store expenses to boost earnings guidance," Hastings said in a research note. "The second quarter is looking good for the entire industry, and the outlook is upbeat for early back-to-school."

The world's largest retailer,


(WMT) - Get Report

, confirmed its previous statement that same-store sales in June rose a better-than-expected 4.5% from a year ago. Still, the company said the sales momentum won't result in earnings upside as costs continue to be problem.

Wal-Mart backed the consensus Wall Street earnings estimate of 65 cents a share for its second quarter, calling it "reasonable" and within its previous guidance of 63 cents to 67 cents a share.

"We are encouraged by the higher comp-store sales momentum," Wal-Mart said. "We do, however, continue to experience expense pressure in the quarter."

Wal-Mart's chief competitor,


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, also saw a sales surge in June that beat expectations. It reported a 9% jump in comps for the month, well above its estimated range of 4% to 6% gains. Its total sales rose 16% to $4.58 billion.

Another discounter,


(COST) - Get Report

, reported a 9% increase in same-store sales, beating consensus estimates. Its total sales rose 12%.


(KSS) - Get Report

also beat estimates with a same-store sales gain of 14.4% for June. Its total sales rose 25.6% to $1.1 billion.

Department store chain

J.C. Penney

(JCP) - Get Report

reported a June same-store sales increase of 7.4%, beating estimates. The company had predicted comps in the low single digits. Its total sales rose 8.1% to $1.32 billion, while catalog and Internet sales were up 9.1%.

Federated Department Stores

, the parent of Macy's and Bloomingdale's that recent struck a deal to acquire

May Department Stores


, said its comps rose 2.9% in June. The results fell short of estimates.

May also disappointed Wall Street, reporting a June comps gain of 0.6%. Its total sales rose to $1.40 billion, up from $1.16 billion in the same month last year.

At the high end,


(GES) - Get Report

said its same-store sales rose 11% in June, blowing away estimates.


(JWN) - Get Report

also exceeded expectations, reporting that its June same-store sales rose 8.1%.

In specialty retailing,

Abercrombie & Fitch

(ANF) - Get Report

reported a blowout month, with same-store sales surging 38%. Its total sales rose 52% to $221.6 million.


(CHS) - Get Report

also outperformed, posting a 9.8% rise in June comps. Its total sales for the month climbed 40% to $131 million.



(GPS) - Get Report

, which was expected to post a sales decline in June, said its same-store sales were flat. By division, June comps were up 3% at Gap stores, down 6% at Banana Republic stores, and flat at Old Navy stores in North America. At the company's international stores, same-store sales rose 1%.

Late Wednesday, one of the hottest clothing sellers for teens,

American Eagle


, said its same-store sales jumped 28% in June from the same month last year, wiping out the estimate. Its total sales for the month increased 37.3% to a record $197.4 million.




said its same-store sales came in lower than expectations. The teen apparel retailer reported its comps rose 2%, falling short of consensus estimates.

Aeropostale also cut its earnings forecast for its second quarter, citing aggressive discounting in June. It now expects earnings between 16 cents and 19 cents a share, down from its previous forecast of 20 cents to 23 cents.

Men's Wearhouse


, a discount retailer of men's professional clothing, reported same-store sales rose 9.7% in the U.S. and 5.3% in Canada.

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