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Discounters get boost from tax rebate

New York — With rebate checks starting to land in taxpayers' mailboxes, same-store sales in U.S. discounters — many of them running special promotions for consumers who cash their checks in their stores — shot up by 5.4 percent during the third week of July, the strongest gain in months.

But high-price, high-margin department stores continued to sing the blues, with sales declining by 1.3 percent, extending a long streak of disappointing sales that dates back to last summer.

Even given the weakness at department stores, the Redbook Retail Sales Average advanced by 2.2 for the three weeks month to date, besting a target of 2.1 percent — the first time in months that the average has actually exceeded plan.

"Sales in department stores continued to be disappointing," said Redbook analyst Catlin Evans. "Many retailers in this category now expect to end the month below plan. Discount stores, by contrast, continued above plan for the second consecutive week. With one week to go, sales results for the month-to-date are convincingly ahead of our July target for discount retailers."

Levis added, "In the most recent period, retailers continued to focus on clearing summer goods land began to bring in back-to-school merchandise. As heat waves continued across the country, stores reported high demand for hot-weather items such as fans and air conditioners. Discount stores were strongest in food and other basic consumables. Air conditioners also sold well."

Eyeing the avalanche of rebate checks being sent out this month, Levis commented, "The government began mailing tax rebate checks last week. The checks are expected to total about $38 billion and many retailers hope that their recent promotions will attract consumers to spend their rebates in their stores. Thereafter, by mid-August, tax rebates and back-to-school demand are expected to inject some life into the retail sector."

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