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As weather warms, so do retail sales

NEW YORK - The arrival of summer weather prevailed over consumers' worries about rising oil prices last month, sending shoppers into stores and delivering retailers their best performance in more than a year.

As merchants released their better-than-expected June sales figures, even recent laggards like Wal-Mart Stores Inc. had strong results. The winners were from a range of retail sectors, including discounters and wholesale clubs such as Costco Wholesale Corp. and Target Corp., department stores like Nordstrom Inc. and J.C. Penney Co. Inc. and teen retailers such as Abercrombie & Fitch Co. A handful of companies including TJX Cos. Inc. and Family Dollar Inc. had disappointing results, but they were the exceptions.

Overall, "the final results were terrific," said Ken Perkins, president of Retail Metrics LLC, a research firm in Swampscott, Mass. "There was broad-based strength across all retail segments."

The International Council of Shopping Centers-UBS sales tally of 70 stores surged 5.3 percent in June, surpassing the 4.5 percent forecast and the industry's best showing since May 2004, when the index was up 5.7 percent, according to Michael P. Niemira, chief economist at the International Council of Shopping Centers.

The tally is based on same-store sales, or sales at stores open at least a year. Same-store sales are considered the best indicator of a retailer's strength.

June - the second most important month of the year in a retailer's calendar after December - is a period when merchants clear out summer goods to make room for fall. With clean inventories behind them, the nation's stores should be able to make the transition to the back-to-school selling season more easily, Perkins said.

Niemira noted that June's strong sales gain was helped in part by easier comparisons with June 2004, when the tally had a weaker 3.0 percent rise.

Still, June's performance was a relief for retailers who had only modest increases during the March-May period, when lower-than-normal temperatures hurt demand for seasonal merchandise, including clothing. Although oil prices passed $60 a barrel for the first time last month, consumer confidence rose to better-than-expected levels as shoppers shrugged off energy's advance and focused on an improving job market.

Wal-Mart, whose lower-income shoppers had pulled back in recent months partly because of rising gasoline prices, reported a 4.5 percent increase in same-store sales. The figure was in line with the consensus from analysts polled by Thomson Financial, who upgraded their forecast to match the discounter's revised expectations.

Rival Target extended its strong sales streak, posting a 9 percent gain in same-store sales, above the 6.9 percent forecast. As a result, the discounter raised its second-quarter earnings forecast.

Costco Wholesale Corp. announced a 9 percent increase in same-store sales in June, beating the 7.6 percent estimate.

Kohl's Corp. enjoyed a 14.4 percent sales surge, besting the 9.9 percent Wall Street forecast.

But TJX's and Family Dollar's results were disappointing. TJX announced a modest 3 percent same-store sales gain, below the 5.6 percent forecast. Family Dollar had a tepid 1.4 percent increase, missing the 2.5 percent estimate.

Department stores had their best performance since March 2004, according to Niemira.

Penney's same-store sales within its department store business rose 7.4 percent, beating the 4.2 percent forecast.

Federated Department Stores Inc., which is acquiring May Department Stores Inc. in a deal expected to close in the third quarter, reported a better-than-expected 2.9 percent gain in same-store sales. Analysts forecast a 1.9 percent increase.

May eked out a 0.6 percent gain, better than the 1.3 percent decline that analysts expected.

[Last modified July 8, 2005, 01:02:17]