By  on August 10, 2007

Weak consumer traffic caused the majority of apparel retailers to miss same-store sales expectations for July, particularly in the teen sector, but department stores and discounters continued to outperform.

As tracked by WWD, mass merchants posted an average gain of 2.5 percent and department stores increased 2.3 percent, but the specialty sector fell by 2 percent.

Meanwhile, macroeconomic trends hammered the market on Thursday as concerns over credit markets and subprime mortgages continued to dog stocks. The Dow Jones Industrial Average plummeted more than 387 points, or 2.8 percent, to close at 13,270.68. The Standard & Poor's 500 index fell 44.40, or about 3 percent, to 1,453.09.

A number of retail stocks succumbed to the larger market trend and closed the day down. Those companies included Wal-Mart Stores Inc., Target Corp., Macy's Inc., Nordstrom Inc. and J.C. Penney Co. Inc.

Several retailers cited the shift of back-to-school, driven by later school start dates, as the cause of soft comp-store sales. American Eagle Outfitters Inc., Abercrombie & Fitch Co. and Aéropostale Inc. all did much worse than expected, posting declines of 6, 4 and 11.9 percent, respectively.

The specialty sector posted soft results for the month, with more than half of specialty chains posting declining same-store sales.

Teen retailers fared the worst, missing expectations that were already lowered in anticipation of soft sales in July. In the days leading up to the release of sales numbers, analysts' estimates had dropped precipitously. The actual numbers reported Thursday show the segment "cratered" said Retail Metrics' Ken Perkins in a note.

"These very weak results are [because] of some calendar shifts as well as later back-to-school starts, but the extent of the weakness may cause some concern about the back-to-school selling season which lies before us," Perkins said.

The teen sector, and other stores that lagged in July, could also be suffering from a lack of fashion newness, Donald Soares of Capgemini's retail practice pointed out.

Bright spots in July came from better-than-expected results in the department store sector, discounters and at warehouse clubs. Neiman Marcus Group Inc., Nordstrom, Saks Inc. and J.C. Penney posted comp gains of 8.3, 9.4, 14.9 and 10.8 percent, respectively, and all met or exceeded consensus estimates. Target reported a 6.1 percent increase. Wal-Mart's discount stores climbed 1.3 percent, beating expectations that it would only increase 0.9 percent.

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