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US department stores suffer in slowdown

US retailers experienced mixed fortunes last month, with discount retailers faring better than department stores.

Several US department store chains were hit by a slowdown in trade in July. JC Penney said like-for-like sales dropped 6.5%, while sales were down 6.1% at Nordstrom and 5.3% at Saks.

In the young fashion sector, sales at Abercrombie & Fitch dropped 7%, while like-for-like sales at lower-priced rival American Eagle also fell 7% for in July to US$232.8 million (£122m). Both issued profit warnings as a result.

However, some young fashion chains fared better. Sales at casualwear retailer American Apparel rose 25% in July.

Urban Outfitters, which sells a mix of branded and own-label product, saw its comparable store sales rise by 13% for the second quarter. Total sales rose 30% to US$454.3m (£238.8m) for the second quarter.

Urban Outfitters chief executive Glen Senk said: “All of our brands and channels executed exceptionally well, with the Urban brand gaining momentum as it headed into the back-to-school season.”

Retailers at the discount end also fared well, with TJ Maxx, which owns UK discount chain TK Maxx, reporting a net sales rise of 7% to US$4.6 billion (£2.4bn) for the second quarter which ended July 26.

President and chief executive Carol Meyrowitz said the increase was in line with expectations. “We are pleased with our second quarter performance. We delivered strong sales, merchandise margins and profit increases on top of strong operating results last year. Our core businesses are funding investments in domestic and international growth vehicles.”

However, supermarket chain Wal-Mart said the back-to-school season had got off to a slow start, and predicted a slower rate of growth for August. It said sales would rise by 2% at the most, compared with a 3% increase in July.

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