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Published: Friday, 7/11/2008

Discounters' June sales thrive, mall stores' slip

FROM THE BLADE'S NEWS SERVICES
Limited Brands, parent of Victoria's Secret, posted a 9% sales decline. Limited Brands, parent of Victoria's Secret, posted a 9% sales decline.
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NEW YORK - Enticed by heavy discounts and armed with stimulus checks, shoppers boosted sales at some of the country's largest discount chains last month.

But they stayed away from higher-priced department stores and specialty stores.

Sales reports yesterday from the nation's retailers showed better-than-expected results at discounters and wholesale club operators including Wal-Mart Stores Inc., BJ's Wholesale Club Inc., and Costco Wholesale Corp.

But sales at mall-based apparel stores including Limited Brands Inc., Gap Inc., and Wet Seal Inc., remained sluggish.

"The rebate checks have kicked in this month, and that is trickling into some discretionary areas," said Ken Perkins, president of RetailMetrics LLC, a research company in Swampscott, Mass.

But, he added, the checks only provide a "one-time bump" and said, "The back-to-school season is going to be challenging."

Wal-Mart reported a 5.8 percent increase in sales at stores open at least a year, known as in same-store sales, considered the best measure of results because they exclude the effect of location openings and closings in the past year.

Wal-Mart said economic stimulus checks helped lift overall customer traffic. The results exclude fuel sales.

Analysts polled by Thomson Financial expected an increase of 3.8 percent.

The world's largest retailer noted strong gains in grocery, entertainment, and health and wellness items.

Target Corp., which has not fared as well as Wal-Mart in recent months, reported a 0.4 percent gain in same-store sales. Analysts had expected a 0.5 percent decline.

Costco reported a 9 percent gain, surpassing the 8.2 percent estimate from Wall Street.

BJ's said its June same-store sales soared 14.5 percent, topping analyst expectations of a 10.9 percent gain.

Limited posted a 9 percent decline in same-store sales, worse than the 7.4 percent decline that analysts had expected. Gap reported a 7 percent decline, better than the 11.6 percent expected.

Wet Seal had a 2.9 percent decrease, in line with the 3 percent drop that analysts had predicted.

Upscale department store chain Nordstrom Inc. experienced an 18.6 percent drop, which it blamed in part on a decision to shift its half-yearly sale for women and children from June to May. Sales at J.C. Penney Co. Inc. fell 2.4 percent, and Dillards Inc. reported a 5 percent decline.

Kohl's Corp. was an exception among department stores, with a 2.3 percent increase.

Sears Holdings Corp. and Macy's Inc., the two biggest U.S. department-store chains, don't report monthly same-store sales.



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