Markdowns Boost Retail Sales Bargain Prices Draw Shoppers As Retailers Clear Summer Merchandise

Americans finally went shopping last month, lured into stores by discounts on merchandise that had languished during a disappointing and unusually cool spring.

The nation’s retailers said Thursday that sales picked up in July thanks to heavy markdowns used to move out everything from sun dresses to air conditioners to make room for fall lines.

“Consumers will go shopping when they can smell clearance prices,” said Kurt Barnard, a retail consultant and president of Barnard’s Retail Marketing Report. “The behavior that we’ve seen in July signifies that shoppers will wait to buy until prices drop.”

Separately, the Labor Department reported Thursday that new applications for unemployment insurance totaled a seasonally adjusted 300,000, up from 275,000 during the week ended July 26, when jobless claims fell to a 23-year low. The jobless report and the retailers’ sales figures were further evidence that the economy is growing at a moderate pace.

It was a cold and dismal spring for retailers, who couldn’t get shoppers into a buying mood despite a soaring stock market, high levels of consumer confidence and low unemployment levels.

The sales slump began to turn around in June as the weather improved and stores began to slash prices. Once July came, shoppers were out in force, enticed by the big discounts - some retailers lopped 70 percent off spring and summer merchandise.

Faring best in July were discounters like Kmart Corp. and Wal-Mart Stores Inc., and department stores such as Federated Department Stores Inc. and May Department Stores Co.

Specialty retailers, however, continued to struggle, although there were some signs of recovery for such troubled merchants as Limited Inc. and Talbots Inc.

Despite the shaky start during the spring, analysts said the strong July sales will lift second-quarter earnings and the outlook for retailers in the coming months is good.

“This sets the stage for the rest of the year,” said Joseph Ronning, a retail analyst at Brown Brothers Harriman.

The Salomon Brothers retail index, the investment firm’s barometer of sales performance, rose 6.1 percent last month after a 4.6 percent gain in May. It was up 2.3 percent in July 1996.

Wal-Mart said sales from stores open at least a year rose 6 percent from a year earlier, while total sales were up 11.3 percent. Sears, Roebuck and Co. said its same-store sales rose 2.4 percent, while total sales advanced 8.6 percent.

Kmart said same-store sales increased 9.2 percent and total sales rose 5.9 percent.

Dayton Hudson Corp. said same-store sales increased 5.6 percent and total sales rose 9.9 percent. Same-store sales at the company’s Target discount stores rose 7.5 percent and total sales rose 15 percent, while sales were in line with expectations at its Mervyn’s clothing stores and department stores divisions.

J.C. Penney Co. Inc. said its same-store sales rose 2 percent and total sales were up 38.6 percent.

Federated said its same-store sales rose 8.6 percent and total sales gained 9.3 percent. May said its same-store sales rose 5.7 percent and total sales were up 10.6 percent.

Limited Inc. said same-store sales rose 1 percent and total sales rose 9 percent.