Dept. Stores Did Better than Discounters
August same-store sales better than expected. Maybe those tax-free sales days made a difference: 17 states had at least one tax-free weekend in August, up from 13 last year, including big states like Florida, Illinois, and Massachusetts, and it looks like they made a difference and offset the very hot weather.

Sales look likely to top a 3 percent year over year, above expectations of a 2.8 percent gain, according to RetailMetrics.

Department stores did well: Nordstrom , JCPenney , and Macy's were all better than expected; Saks up only 1 percent, below expectations.

Limited posted a 10 percent comp (7.3 percent consensus)

Discounters were okay, not great: Costco sales up 7 percent (4.2 percent consensus) ("Inflation in gasoline prices and strengthening foreign currencies had a positive impact on comparable sales") on strong international sales. Target was a bit light but said back to school was strong, BJ's a bit shy.

Not much in the way of guidance: Pier One guided above consensus for the current quarter

Elsewhere:

1) After rising 15 percent yesterday, Burger King jumps another 22 percent to just under $23 after our David Faber reported that a $4 billion all-cash deal for the fast food giant will be announced shortly. His sources tell him that the creator of the Whopper will be sold to 3G Capital, a private equity firm, for $24 per share.

2) Continental Airlines reported a slight 0.4 decline in traffic as a 2.6 percent drop in domestic traffic outweighed a 1.1 percent rise in international traffic. Despite the lower traffic numbers, the airline flew fuller planes (at record levels) as capacity fell. Prices also rose as revenue per available seat mile rose 18 percent from August of last year.

3) In its fight to win over competitor Dollar Thrifty , Avis Budget raised the amount of cash offered in its bid by 3.8 percent for the rental car company. The new offer from Avis Budget pays Dollar Thrifty shareholders $40.75/share in cash and 0.6543 shares of Avis.

Budget Dollar Thrifty had rejected Avis Budget's original $1.4 billion offer since it did not include a reverse breakup fee. Amid Avis' pursuit, Dollar Thrifty has agreed to a $41/share all-cash deal with Hertz .

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