July Retail Sales Disappoint

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Jae C. Hong/AP

Not even big discounts were enough to entice consumers into relaxing their grip on their wallets last month.

Retailers reported same-store sales rose 2.9%, below what analysts expected, and the lackluster rise doesn't bode well for the upcoming back-to-school season. Almost two-thirds of the 28 retailers tracked by Reuters sold less than estimated.

Some retailers stood out from the pack. Limited Brands Inc., Abercrombie & Fitch and Macy's all exceeded expectations. Macy's said its sales for this month were already off to a good start thanks to its new line of "Material Girl" clothing designed by pop star Madonna.

But retailers like J.C. Penney and Aeropostale reported disappointing results.

The sluggish sales underscore how what looked like an emerging recovery just a few months ago now seems more like the eye of an economic storm.

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