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Same-store sales soft to start July

After heading out to the malls during the final days of June, consumers took a breather moving into July, and retail same-store sales turned in a notably soft performance, falling beneath expectations at both department stores and discounters, according to a key barometer, the Redbook Retail Sales Average.

With consumer confidence waning, hammered by a crumbling stock market, evaporating 401(k) savings plans and a spate of corporate accounting scandals, same-store retail sales rose just 1.5 percent, short of an expected increase of 2.4 percent. And sales fell 0.6 percent beneath June levels, compared with a small anticipated gain of 0.3 percent.

Redbook analyst Catlin Levis, said, "Sales were below plan in the first week. Some retailers were not able to sustain their pace and saw business tail off as the week progressed."

Levis added, "Retailers said it was not atypical for consumers to pause and regroup after intense weather or event-driven buying."

Breaking business out by channel of distribution, Levis noted, "Department stores continued to report that consumers were not responding to fashion and seasonal initiatives." Indeed, same-store sales at department stores fell by 3.3 percent during the week, exceeding an anticipated decline of 2.9 percent."

And even the discount channel failed to live up to expectations during the first week of July, with sales advancing by 4.4 percent, well beneath a targeted gain of 5.6 percent. "Discounters did their best business in toys, basic apparel and consumer staples," Levis noted. Most consider inventory levels to be quite good for this time of year, which may help to relieve some price pressure in the traditional July clearances which commenced last week."

Redbook Retail Sales Average
First week of July

Week ended 7/13 7/20 7/27 8/3 Month Target
*Including chain stores and traditional department stores.
Source: Redbook Retail Sales Average, a unit of Instinet, a Reuters company.
Department stores* -3.3 -3.3 -2.9
Discounters 4.4 4.4 5.6
Redbook Average 1.5 1.5 2.4

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