Analysts did not have high hopes for apparel retailers in July, due to very hot weather in some areas and the increasing tendency of some shoppers to time their purchases with tax holidays or wait until school starts to see what other kids are wearing first.
However department stores, especially those like Nordstrom and Saks, which cater to high-end shoppers, continued to shine, showing that luxury consumers are not pulling back.
Retail sales have been trending lower this year as weakness in the housing market ripples through the economy and high fuel prices require more of shoppers' budgets. Markets have been hammered in recent weeks amid concerns over subprime mortgages, anemic U.S. jobs growth and uneven corporate earnings reports.
The trend has raised concerns about whether the strength of consumer spending, which accounts for about two-thirds of U.S. economic activity, will hold up.
An extra week on last year's retail calendar created monthly periods this year not exactly comparable to year-ago results.
Harry Potter To The Rescue
Discounters that sell general merchandise, including Target and Costco Wholesale, reported July sales that were better than analysts expected, with Costco citing strong sales of televisions, digital cameras and the latest Harry Potter book release.
Target same-store sales rose 6.1% in July, which was within the discount retailer's forecasted range. Meanwhile, Costco Wholesale said same-sales sales rose 7% last month, compared with predictions from analysts that called for an increase of 5.5%.
By contrast apparel retailers such as Chico's FAS, Pacific Sunwear of California, Gap and Talbots posted weaker-than-expected results.