Retail Store Sales Relatively Decent Across the Board

Following Independence Day, many major retail chains reported same store sales that beat or remained in-line with estimates. At a time when sales are usually plentiful and shoppers can be found traipsing the malls for hot summer deals, June brought about sweltering competition and few surprises to analysts whose expectations were already quite low.

While certain brands performed better-than-expected, such as The Limited (NYSE: LTD) and The TJX Companies (NYSE: TJX), The Gap (NYSE: GPS) in particular experienced an exceptionally impressive quarter, positioning itself to be Jefferies' favorite retail stock of the moment. The company, which has recently closed doors to several of its U.S. store locations, was in-line with expectations with all three domestic businesses beating estimates.

"GPS continued to impress us with better than expected topline at all three domestic brands. In fact, we saw them accelerate on a two-year basis during June which is very encouraging and gives us more confidence in the improved product, especially at the Gap brand. While international did underperform, we note that this is only a small part of the biz (~15% of sales) and has been historically volatile," Jefferies commented in its Thursday afternoon report.

The Gap is not the only one astonishing investors and analysts today, as Aeropostale (NYSE: ARO) is also positioned for uptick in the coming quarters. The retailer, known for its bright colors and younger fashions, now has thinning inventories and attractive pricing that will likely keep the brand in good graces throughout its second quarter earnings report.

According to Jefferies, retailers are doing a better job at controlling inventories overall and driving sales through the use of promotions.

Take for example, Ross Stores (NASDAQ: ROST). The off-price retail apparel and home fashion chains saw same store sales growth of 7 percent in June alone, identical to its competitor The TJX Companies. Inventory such as junior's apparel, shoes and accessories were the strongest company-wide, prompting Canaccord Genuity to raise Ross Stores' second quarter EPS estimate by $0.02 and up The TJX Companies' EPS estimate by $0.03.

Comparatively, Limited Brands proved that higher-priced retailers can still be successful leading into the summer months. The clothing distributor remained neck-in-neck with off-priced retailers, also reporting a jump of 7% in same store sales growth.

Not all companies were as lucky as the previously mentioned this past month, as others such as The Buckle (NYSE: BKE), The Wet Seal (NASDAQ: WTSLA) and Cato (NYSE: CATO) reported negative same store sales, leaving analysts with weakened faith concerning the brands.

Among the worst revealed today, Cato's was down 10 percent in same store sales throughout June, while The Wet Seal followed up with negative 9 percent. The Buckle was able to slink away with a decline just under 3 percent. These three companies' results might have prompted shoppers and investors to wonder when business will begin to pick-up again.

While The Buckle and The Wet Seal are expecting back-to-school to give business the boost it needs, Cato noted today that they may not be as fortunate.

"Cato expects skittish consumers to hurt results for the rest of the year. It now expects to hit the low end of its previous earnings outlook in the second quarter, between 53 to 57 cents per share. That's 7 to 13 percent lower than the second quarter of last year," CBS News reported this morning.

Thursday's reports have given clarity to the economic situation for several brands this summer. While others are faring far better than the stragglers left behind, apparel distributors are banking on back-to-school shoppers and leaner inventories to help pull them out of their slump come fall.