Ahead of the Bell: Mall traffic

Young people pumped up foot traffic was at the country's malls last weekend, said FBR Capital Markets analyst Adrienne Tennant, and retail sales in June might not be as terrible as analysts fear.

She noted strong discounting by retailers such as Charlotte Russe Holding Inc., Gap Inc.'s cheaper Old Navy stores and Pacific Sunwear of California Inc. Lower prices didn't necessarily lead to sales, however. Only Old Navy showed a strong uptick in business because of aggressive summer markdowns, she said.

Teen retailer Abercrombie & Fitch Co., on the other hand, had removed their "clearance" signs and stocked stores with new full-price merchandise. Abercrombie has been a standout among retailers with its resistance to heavy markdowns on clothes, although it recently said it would start instituting lower prices. The chain has had big drops in same-store sales, a key retail metric of sales growth changes in shops open at least a year.

"Shoppers may not be able to justify purchases of the (Abercrombie) product, which, though trend-right, may be out of reach for many consumers," Tennant said.

She commended J Crew Group Inc. for its "impressive traffic" and well-controlled inventories.

Retailers report their June sales results on July 9.