WASHINGTON (MNI) – The following is the commentary from the
ICSC-Goldman Sachs Weekly Chain Store Sales Snapshot released Tuesday:

The ICSC-Goldman Sachs (ICSC-GS) chain store sales index for the
week ending July 24 again rose on a week-over-week basisup 0.6%. On a
year-over-year seasonally-adjusted basis, the pace of spending moderated
to 3.8% in the latest week. Easy comparisons continue to lift sales —
though not as much as the prior weekwhile the abnormally hot weather
helped drove some customer traffic in regions. But the retail industry
is in a transition period between summer clearance and back-to-school,
which makes it difficult for retailers to leverage the hot-weather for
sales.

Back-to-school will kick in during early August as a wave of states
have their state sales tax holidays to help consumers as they head back
to school. (Mississippi will be the first state with its sales tax
holiday — July 30-31 — on clothing and footwear to usher in the
back-to-school state tax holidays. A majority of states have their sales
tax holidays beginning on or about August 6.) According to Weather
Trends International (WTI) unseasonably hot weather lingered for its
ninth consecutive week “with temperatures trending both much hotter than
last year and above average for the nation as a whole with the month on
pace to be the hottest in 115+ years.” Lingering hot weather may likely
delay the launch of the consumers’ back-to-school spending. For the
latest week, WTI also reported that the national temperature average was
+4.2F warmer than last year and +2.5F above its long-term average.
Meanwhile, gasoline prices have begun to edge up again. According to the
U.S. Energy Information Administration the average price of a gallon of
regular-grade gasoline at the pump rose to $2.749 — up about three
cents from the prior week and nearly 10% higher than the same week of
the prior year.

July Sales Expectations

June 2010 U.S. comparable-store store sales rose by an uninspiring
3.0% on a year-over-year basis, as based on a tally of 31 retail chains
compiled by the International Council of Shopping Centers. Although
department stores outperformed the industry (+5.9% y/y), lingering
softness was evident among apparel, discount and drug stores–some of
which was pricing related, which is holding back year-over-year nominal
spending growth. GAFO store prices have been declining on a 3%
year-over-year pace through May, according to government data, which is
the largest contraction since 2003. The message is two-fold: (1) the
nominal sales data may continue to have a soft reading due to the
pricing weakness; but (2) in real or inflation-adjusted terms the pace
is stronger by that three percentage points. This deflationary situation
is troublesome though for an industry that see “nominal sales.” For the
fiscal month of July, ICSC Research expects sales will increase by
between 3% and 4% as easy comparisons boost reported growth, though
declining prices may continue to drag down sales growth.

** Market News International Washington Bureau: 202-371-2121 **

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