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US chains fear stock drops after downturn

Listed retailers in the US are bracing themselves for further declines in share price as a swathe of businesses posted sales dips in June.

The retail performances were announced at the same time as more bad news from banks stung by the mortgage crisis was expected to emerge.

Casualwear retailers Gap and American Eagle both recorded a fall in sales. Gap’s like-for-like sales dropped 7% in June, with negative performances across all its chains, while American Eagle experienced an 11% drop in like-for-like sales compared with an 8% rise the year before.

Young fashion chain Abercrombie & Fitch also posted a 3% drop in like-for-like sales.

Department stores also felt the impact of the credit crunch, with JC Penney reporting a 2.4% fall in sales, with further declines predicted for July.

The retail situation prompted Macy’s chief executive Terry Lundgren to release a statement to reassure management that the corporation, which runs the Macy’s and Bloomingdale’s department stores, was in good financial health.

“As you probably have seen, most retail stocks have been declining in value in recent months as the economy has softened,” he said. “That trend continued yesterday as many of the players in our industry announced disappointing sales for June.”

Like-for-like sales at the Macy’s group were down 1.9% in May and June, but Lundgren said this outperformed most of its competitors.

“On a year-to-date and quarter-to-date basis, our same-store-sales trends are better than JC Penney, Kohl’s, Dillard’s, Nordstrom, Bon-Ton, Gap and Limited Brands, to name a few.

“Continuing the trend begun last fall, we are taking market share from many of our rivals, validating the strength or our strategies, the commitment of our people, and the success of our efforts to deliver fresh and distinctive merchandise.”

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