WRAPUP 4-June discounts help US retail sales, may hit July

* U.S. June retail sales up 3.1 pct vs 3.2 pct view

* Teen apparel chains, department stores top expectations

* Warm weather, promotions help shopping in June

* Heavy discounting to hurt retailer margins-analysts

* Retail shares slip; Abercrombie up 7 pct, Gap down 8 pct
(Adds commentary on winning retail strategies, updates share
movement)

By Dhanya Skariachan

NEW YORK, July 8 (BestGrowthStock) – U.S. retailers relied heavily
on promotions to boost sales in June, helping teen clothing
chains and department stores, but the trend may hit margins as
they head into the key back-to-school shopping season.

Sales at stores open at least a year rose 3.1 percent for
the month, just shy of the 3.2 percent increase that Wall
Street predicted, according to reports from 28 retailers
tracked by Thomson Reuters. That compared with a 4.9 percent
drop a year ago.

“What it really says is we’re just treading water,” said
Stephen Hoch, marketing professor at the University of
Pennsylvania’s Wharton School. “There’s no evidence that
somehow the consumer is going to step up to the plate and spend
us out of the economic doldrums.”

Teen apparel retailers like Abercrombie & Fitch (ANF.N: ) and
Hot Topic (HOTT.O: ) were among the best performers, along with
department store chains such as Macy’s Inc (M.N: ) and JC Penney
Co (JCP.N: ).

These companies had benefited from warmer weather and
promotions for Memorial Day. Penney cited brisk sales of men’s
summer apparel ahead of Father’s Day as well. Shares of
Abercrombie surged 8 percent, while Penney gained 6.3 percent.

But weaker-than-expected results from companies like Gap
Inc (GPS.N: ) and discount chains like Target Corp (TGT.N: )
highlighted concerns over profitability for the wider sector.

Gap same-store sales were flat, while analysts were
expecting a 3.4 percent rise. This sets the company up for
margin pressure this month as it tries to clear merchandise for
the fall. [ID:nASA00I8J]

The Standard & Poor’s Retail Index (.RLX: ) fell 0.9 percent,
trailing the broader market. Gap shares tumbled 8 percent,
while Target fell nearly 2 percent.

“A lot of players entered the quarter with too much
inventory,” Brean Murray analyst Eric Beder said. “They still
have work to do to clear it out.”
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Same-store sales graphic http://link.reuters.com/qys55m

Table on same-store sales results [ID:nRPOvLS4d]
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With consumers proving to be even more choosy about where
they shop, the results show how well individual retailers are
responding on product and pricing.

“You’ve got to wow somebody and really woo their money away
from them,” said Patty Edwards, founder of wealth management
firm Storehouse Partners. She singled out Nordstrom (JWN.N: ),
Zumiez and Aeropostale (ARO.N: ) for successful efforts.

Lazard Capital’s Todd Slater said Limited Brands’ (LTD.N: )
better-than-expected sales were the standout story of the
month. He also praised Ross Stores (ROST.O: ) and TJX (TJX.N: ) for
staying nimble on inventory.

BACK-TO-SCHOOL IN VIEW

June marks the 10th consecutive month of rising sales after
a year of declines during the recession, but analysts have
urged investors not to interpret the strength as a harbinger of
better times while unemployment remains high and consumers stay
cautious. [ID:nN06108058]

New data on Thursday showed a drop in U.S. unemployment
claims, but that was not enough to boost retail shares.
[ID:nN08209499]

The International Council of Shopping Centers said June
sales came in at the low end of its outlook and forecast a
same-store sales increase of 3 percent to 4 percent in July.

“Lower- and middle-income consumers have really taken a
pause here,” Retail Metrics President Ken Perkins said, adding
that the jobless rate, stagnant home prices and declining stock
markets still weigh on shoppers’ minds.

Perkins said retailers were pushed to cut prices more than
they had planned, with promotions getting heavier toward the
end of the month.

“In terms of back-to-school, it suggests it’s going to be a
difficult one for retailers,” Perkins said. “They are going to
have to be a bit more promotional than they want to be.”

Limited Brands, which operates retail chains Bath and Body
Works and Victoria’s Secret, said June same-store sales rose 6
percent, well ahead of the 3.2 percent gain analysts had
expected. It forecast July same-store sales to be up in the
mid-single digit percentages. [ID:nASA00I85]

Top U.S. warehouse club operator Costco (COST.O: ) reported a
4 percent rise in June same-store sales, but fell slightly
short of analyst forecasts as its stores were closed on
Memorial Day. [ID:nSGE66707F]

(Reporting by Dhanya Skariachan; Additional reporting by
Brad Dorfman, Ben Klayman, Helen Chernikoff, Shradhha Sharma,
Viraj Nair, Emily Stephenson; Editing by Michele Gershberg,
Derek Caney and Lisa Von Ahn)

WRAPUP 4-June discounts help US retail sales, may hit July