By and  on August 6, 2009

Retailers reporting same-store sales today are likely to turn in another round of weak results as cool weather, persistent unemployment and a shift of tax-free holidays into August plagued the month of July.

Even the arrival of new back-to-school merchandise failed to excite consumers, most analysts said.

“July sales are likely to be weak due to sharp markdowns on clearance items and, in some cases, more limited inventory to clear, as well as cooler-than-normal weather for the month, that pared seasonal demand,” said the International Council of Shopping Centers chief economist Michael Niemira. “ICSC Research continues to expect industry sales for July to be off by about 5.5 percent with leaner clearance than last year hurting the reported sales pace.”

Two specialty stores releasing comps after the market closed on Wednesday, Hot Topic Inc. and Zumiez Inc., reported dips in July comps of 8.5 and 16.8 percent, respectively.

In a comparable-store sales preview call, Stifel Nicolaus retail analyst Richard Jaffe said the shift in tax-free weeks in most markets from July last year to August this year will likely “handicap July” and “possibly benefit August.”

But, he said he remained “pretty guarded….I think it’s going to be a tough fall.”

Off-price retailers, however, should be less affected by the tax-free shift, MKM Partners analyst Patrick McKeever said.

“Lower gasoline prices, lower utilities bills and a late-July increase in the federal minimum wage should have provided some offset” from the tax-free shift for discounters and dollar stores, he explained.

Still, analysts largely predicted July comps to be more similar to June, and looked ahead to August and September.

August results are expected to be hurt by the later timing of Labor Day versus a year ago, which is seen pushing some b-t-s spending into September.

“August should pick up the shift, but then be negatively impacted by the Labor Day shift into September,” said J.P. Morgan retail analyst Brian Tunick. “We are just a month away from the start of the two-year negative [comps] for the retailers. September comps will be the first real evidence if the bulls’ top-line recovery thesis is taking hold.”

Retail stocks slipped Wednesday, with the S&P Retail Index off 0.4 percent, or 1.37 points, to 355.72. Some chains bucked the trend, including Christopher & Banks Corp., up 4.5 percent to $8.64; Zale Corp., 4.2 percent to $7.21; Nordstrom Inc., 3.1 percent to $27.96, and Urban Outfitters Inc., 0.5 percent to $24.56. (For more on Wednesday’s stock activity, see page 18.)

In the broader market, the Dow Jones Industrial Average fell 0.4 percent, or 39.22 points, to 9,280.97, despite a strong showing from financial stocks. Three of the best-performing stocks for the day were American International Group (up 62.7 percent), Freddie Mac (31.2 percent) and Fannie Mae (29.8 percent). All three are controlled by the government after bailouts during last year’s financial crisis.

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