NEW YORK — Analysts predicted scorching weather across the nation dried out consumer spending in July, and will weaken same-store sales, which retailers report today.
But the good news is shoppers who did make it to malls helped clear out summer merchandise. As a result, analysts are calling for July comps to rise about 4.2 percent. In June, same-store sales showed a gain of 5.4 percent.
At a mall visit in New York earlier this week, when temperatures soared to nearly 100 degrees, traffic was on the light side — except for Abercrombie & Fitch’s Hollister store, which had long lines and a crowded dressing room. But analysts noted that, overall, few teens were ready to think about back-to-school fashions during record heat.
Mall traffic was up just shy of 1 percent in the first week of July, but has been flat the remainder of the month, said Kimberly Greenberger, specialty apparel retailing analyst at Citigroup Global Markets Inc.
While customers might not be eager to try on skinny jeans and tunics, analysts said the heat wave may actually be a positive for moving summer clearance items and making room for fall products for August and September.
“On one hand, temperatures likely helped retailers work through the remainder of summer clearance merchandise at strong margins. On the other hand, those retailers whose fall transitional assortments were more fall-like [may] experience difficulty in driving sales of fall-oriented items,” said Jennifer Black, of Jennifer Black and Associates, in a research note.
While July is a small volume month in regard to sales, it is a critical transition to the b-t-s season, and poor results might put a damper on investors’ outlooks on the remaining b-t-s season, said Elizabeth Pierce, senior vice president and lead retail analyst at Sanders Morris Harris.
“Given the already external pressures of gas prices, the slowing down of the housing markets and rising interest rates, it is hard to ignore or dismiss a slowdown in same-store sales as strictly weather related,” she said. “Everyone is waiting for the shoe to drop [in consumer spending] and it is hard not to question if this is the first crack.”
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Retailers such as Abercrombie & Fitch and Guess, who have already made a full transition to fall merchandise complete with hooded sweatshirts and jackets, are more likely to be hurt in coming weeks than Aéropostale, who is still selling graphic T-shirts and tank tops for 50 percent off, said Eric Beder, senior vice president at Brean Murray Carret & Co.
American Eagle Outfitters and The Children’s Place have also made a solid effort to push “wear now” items such as shorts and miniskirts, said Greenberger.
While there is concern that continued heat may hamper August sales, upcoming tax-free holidays along with a teen desire to be in style this b-t-s season could bolster sales.
“It is much easier to have confidence in the teen specialty retailers since children and teens are constantly growing, Greenberger said.