Aug. 3 (Bloomberg) -- July sales at the biggest U.S. retailers, led by Wal-Mart Stores Inc., rose more than analysts expected as unusually hot weather prompted consumers to seek the comfort of air-conditioned shopping.

Wal-Mart said today that sales at stores open at least a year rose 2.4 percent. Federated Department Stores Inc., the No. 2 department store operator, posted a 3.3 percent increase. J.C. Penney Co., the third-largest U.S. department-store company, reported a 4.9 percent gain in comparable-store sales and raised its second-quarter earnings forecast.

July same-store sales gained 3.5 percent, the International Council of Shopping Centers said, based on 60 chains. Last month may have been the fifth-hottest July on record, according to Weather Trends International. While rising fuel costs might have discouraged some shoppers, consumers continued to visit retailers during the month.

``Consumers very definitely spent more time in the mall and stores to escape the heat, and that certainly helped clear out summer merchandise,'' said Patricia Edwards, a Seattle-based money manager at Wentworth Hauser & Violich, with $8.2 billion in assets including Wal-Mart shares. ``I think the consumer is holding up quite nicely.''

The hot weather helped retailers sell fans, air conditioners, pool supplies and sun care, Weather Trends, a Plymouth Meeting, Pennsylvania-based weather consulting firm, said in an Aug. 1 report.

Gasoline Prices

Gasoline prices, which at $3 a gallon are 31 percent higher than a year ago, are constraining spending, particularly by low- income customers, analysts said.

Still, consumers have had more than a year to adapt to higher prices, Edwards said. They also were helped by healthy personal income, said ICSC Chief Economist Mike Niemira.

Shares of Wal-Mart, the world's largest retailer, rose 36 cents to $44.73 at 4:14 p.m. in New York Stock Exchange composite trading. The stock is down 4.4 percent this year. The Standard & Poor's 500 Retailing Index increased 9.42, or 2.2 percent, to 432.13 today, and has declined 5.5 percent this year.

While the industrywide sales gain was 1 percentage point higher than the ICSC's forecast, it trailed the year-to-date increase of 3.8 percent. Comparable-store sales rose 3 percent in June, and were up 3.6 percent a year ago.

The Goldman Sachs retail index gained 3.1 percent, with department stores and discounters faring better than apparel retailers. That index tracked 28 retailers. Retail Metrics LLC said 56 percent of retailers beat estimates.

Wal-Mart

Wal-Mart said sales were strongest in Rocky Mountain states and in the West, where temperatures were especially high last month. Food outsold general merchandise, the company said on a recorded call today. While fewer shoppers came to stores, average purchases rose as customers consolidated trips.

The company said consumers responded to price cuts on back- to-school-items, buying crayons, pencils and notebooks along with clothing and basic items for dorm rooms. They also snapped up water toys.

``It looks like the consumer's hanging in,'' Retail Metrics analyst Ken Perkins said in an interview.

Federated's sales gains were just above analysts' estimates of 3.2 percent, according to Retail Metrics, which is based in Swampscott, Massachusetts. Plano, Texas-based J.C. Penney raised its second-quarter earnings estimate for the third time, adding 6 cents to 71 cents per share.

Minneapolis-based Target Corp. said same-store sales rose 3.1 percent, falling short of the 3.5 percent estimated by analysts. Chief Executive Officer Bob Ulrich said he was ``confident'' the company would meet or exceed analysts' second- quarter earnings estimate of 69 cents a share.

More Gains

Nordstrom Inc. had a 5.3 percent gain, Neiman Marcus Group Inc., 7.5 percent; and Saks Inc., 2.4 percent. Gap Inc.'s sales fell 4 percent, and teen retailers' results were mixed.

Gap, the largest U.S. clothing chain, missed analysts' estimates as it sold merchandise at lower prices to clear inventory. The company said second-quarter profit fell to 13 cents to 15 cents a share, below the average estimate of 22 cents among analysts surveyed by Thomson Financial.

Investors will be watching the back-to-school period, the second-biggest selling season after the holidays, even more closely this year, said Arun Daniel, an analyst with ING Investments LLC.

``They will be trying to discern whether an economic slowdown lies ahead in the second half of the year, as some economists have projected,'' Daniel said.

August, September

The ICSC is forecasting a gain of 3 percent to 4 percent in sales for back-to-school categories -- apparel, shoes, computers and books -- in August and September combined, compared with a 4.8 percent jump a year ago.

Cincinnati-based Federated forecast a gain of 3 percent to 4 percent for August. Penney said it was cautious about the month, predicting a slight increase in sales.

Sales at dollar-store chains such as Family Dollar Stores Inc. and Dollar General Corp. surged in July. Family Dollar's comparable sales jumped 7.5 percent, beating estimates of 5.2 percent. Dollar General had a 4.6 percent increase, compared with estimates of a 2.1 percent gain.

To contact the reporter on this story: Cotten Timberlake in New York at ctimberlake@bloomberg.net.

Last Updated: August 3, 2006 16:33 EDT