NEW YORK — Retail same-store sales presented a mixed picture in July as the impact of higher gas prices and hotter-than-normal temperatures decelerated consumer spending.
There were exceptions. High-end department stores and several key specialty players, such as Bebe Stores, Guess and Nordstrom, delivered robust and better-than-expected comps, showing gains of 10 percent, 10.7 percent and 5.3 percent, respectively.
Among the retailers tracked by WWD, the average July same-store sales gain for the department store sector was 3.3 percent, beating specialty and mass merchant gains of 2.2 and 1.8 percent, respectively. A year ago, department stores’ average same-store sales reflected a gain of 1.5 percent. Specialty-store numbers fell from 6.3 percent for the same period last year, and the mass merchant channel dropped from a 4.5 percent figure.
The broader retail sector posted same-store sales gains of 3.5 percent in July, according to the International Council of Shopping Centers. Results were above the ICSC’s expectations, but below several analysts’ forecasts.
Of the 50 stores tracked by WWD, 34 reported an increase in same-store sales for June, two were flat and 13 posted a decrease.
Several companies missed sales targets for the month and had to adjust their earnings outlooks. Analysts cited increased macroeconomic pressure from rising gas prices, interest rate hikes, and a soft housing market as the drivers behind the negative performances.
“The July numbers overall were mixed and point towards a [further] slowdown in consumer spending, which we will see in August and September,” predicted Donald Soares, principal of Capgemini America’s consumer products practice.
While July is generally a month not affected by weather trends, analysts said, unseasonably high temperatures in the U.S. may have depressed sales of back-to-school merchandise in favor of wear-now summer clearance items.
“The warm weather across the country should have helped some summer clearance sales, and I think it did, but it also reduced traffic as we went through the month because people either stayed home or went swimming,” said Dana Telsey, chief executive office and chief research officer, Telsey Advisory Group.
Excessive temperatures across the country in July dampened early b-t-s in particular, said weather forecasting firm Planalytics. Demand for summer items continued to be strong, but most purchases were likely oriented toward satisfying basic cooling needs, according to Planalytics’ July report.
Related Articles
You May Also Like
Despite a continued deceleration of consumer spending from June, which showed slowing as well from May, some chains managed to perform exceptionally well, including J.C. Penney, Federated Department Stores and Nordstrom. The strong performance of department stores, Soares said, is attributable in part to major restructuring and remodeling that has gone on at those companies and has given them a sharp focus.
“It’s almost like aggression of execution, and the department stores, especially J.C. Penney and Federated, have been doing much better in that respect. They are able to attract higher-end customers, which is their core audience, and attract them away from the traditional discount stores,” Soares explained.
Other top performers included Bon-Ton, which had a gain of 12.2 percent against an easier comparison, and Kohl’s, up 5.9 percent. In the sector, only Gottschalks and Saks Department Store Group showed declining comps for the month, negative 0.7 and 1.5 percent, respectively.
“It certainly shows that you still do have a consumer that wants to go shopping, even with higher gas prices and very warm weather,” Telsey said.
Strong sales at department stores were driven by clearance items, marketing and strong accessories categories, Telsey explained. At the end of July, many major department stores in Manhattan hosted clearance sales in their trendier departments, and in some cases storewide. Saks Fifth Avenue, for example, held its storewide “Final Cut” sale during the last days of July and into August, offering 50 to 60 percent off selected merchandise.
The specialty sector, while improving on its June average of a gain of 1.8 percent, didn’t fare as well as the department stores. Back-to-school patterns mattered a lot more in this channel, and retailers that were on trend did better, analysts said.
Analysts continued to cite Guess for its strong fashion trends. The company is rolling out a denim line with skinny jeans and cleaner styles that is selling well, according to industry analysts.
American Eagle Outfitters missed expectations for same-store sales in July, reporting a 7 percent increase. The number slid slightly from June’s 11 percent gain, but American Eagle still raised its guidance for the quarter. Analysts pointed to the strength of the company’s soft launch of the aerie sub-brand and a positive consumer reaction to early b-t-s merchandise as drivers for the company.
Limited Brands’ stable of retail companies also did well in July. The company’s Victoria’s Secret stores posted a 13 increase in July comps on the strength of their Pink brand. A recent promotion at the retail chain included a magazine pullout offering a free pair of cotton underwear with the purchase of a Pink item. Bath & Body Works, another Limited retail brand, posted a 16 percent increase in July same-store sales. Limited Brands’ total apparel sales dropped 10 percent.
According to analysts, The Children’s Place, a new addition to the WWD comps list, performed well in its core business and its Disney business. Specifically, the sales gains were due to the releases of the “Cars” and “Pirates of the Caribbean” movies, as well as the addition of a line of apparel at the company for adults and children, according to a report from Ryan Beck.
Gap, Hot Topic and Pacific Sunwear all reported disappointing July comps with decreases of 13, 7.2 and 10.6 percent respectively. The results weren’t out of line with expectations, although Pacific Sunwear dipped lower than some analysts had anticipated. Gap’s Old Navy and Banana Republic divisions both posted flat same-store sales, which was due to the company’s aggressive markdowns in July at Gap and Old Navy. The markdowns were designed to clear product and allow for a cleaner presentation of fall merchandise, which arrived in late July.
The mass merchant group posted lackluster sales gains for July. Wal-Mart Stores Inc. was at the top of its guidance with a 2.3 percent increase in July sales, after missing its targets in June. The growth is attributable to the start of the retailer’s b-t-s push on July 9, Telsey said.
“We were pleased with early customer reaction to fashion basics and room solutions for back-to-college. In apparel, school uniforms, screened T-shirts, fashion denim and shorts have done well,” said Tom Schoewe, executive vice president and chief financial officer, Wal-Mart.
Looking ahead, slower b-t-s sales in July probably will have an impact on later months, analyst aid.
“Going forward for back-to-school and back-to-work, I think August is a much more important month,” Telsey said. Additionally, she pointed out, there are state income tax holidays that shifted from July last year to August this year that may impact consumer buying patterns later this summer.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||