Retail comparable-chain-store sales finished fiscal December just above flat as retailers fought through sluggish doldrums early in the month before finishing with a bang. Retail point-of-sale data compiled by SportScanINFO showed slow sales through the first three weeks, before picking up in the post-Holiday weeks of the five-week month ended January 5. Unfortunately, those improved sales results, when compared to the earnings warnings issued by a number of retailers late last week, suggest the post-Holiday sales rush may have come at the expense of margins.
According to a preliminary tally of 45 retail-chain stores compiled by the International Council of Shopping Centers, December same-store sales grew just 0.9% for the month, but the shifting calendar that benefited November caused a 0.75 to 1 percentage point decline to comps this month. The ICSC estimates that without the calendar drag, comparable store sales would have increased approximately 1.7% for the period. ICSC estimates that the combined November-December period saw a comparable store sales improvement of 2.2%, the weakest since 2002 when comps rose only 0.5%.
The Luxury retailer sector has moved into negative territory, but the Wholesale Club business, which usually accompanies the Luxe guys in trending, led all gainers for the month, posting a 5.3% increase for the period, followed by Discount Stores, which posted 2.2% growth for the month. Total Department Stores, which includes Luxury, Better Department Stores and the Mid-Tier, comped down 7.0% for the month and Apparel Chain stores were down 4.4% for the period.
Pacific Sunwear of California, which is not part of ICSCs Apparel Chain survey, reported a slight increase in sales for fiscal December, inching up less than half a percentage point to $234.6 million from $233.5 million in December 2006. Mid-single-digit growth at the PacSun concept more than offset a high 20s drop in sales at the soon-to-be-shuttered demo chain. PacSun total sales grew 4.0% to $213.6 million for the month, from $205.4 million last year. Demo total sales were $19.3 million, a decrease of 27.3% from December last year. The PacSun chain comped just above positive for the month, up 0.8%, while Demo comps dropped 28.4%. On an overall basis, comps decreased 2.8% for fiscal December.
Looking at just the PacSun concept, the company said geographically comps were strongest in Texas, the Northwest and the Midwest. Comps were weakest in the Desert Southwest, Southern California and Florida.
Apparel accounted for 73% of PacSun comp sales, with footwear and accessories the remainder. The apparel business comped up 13% for the fiscal month, with juniors apparel comps up low-20s and guys apparel comps up high-single-digits. Footwear and accessories comps were down a combined 22%. The company said in a recorded call that it intends to limit the penetration of its combined footwear and accessories businesses to 25% of total sales going forward. Accessory comps were down in the high-teens with junior accessories comps down low-double-digits and guys accessory comps down in the mid-20s. Footwear comps were down in the high-20s with juniors down mid-30s and guys down in the mid-20s.
Transactions per comp store were down in low-single-digits. Average unit retail was flat, average items sold per transaction were up mid-single-digits, and the average transaction value per comp store was up mid-single-digits.
Citing the weaker-than-expected performance in December and the impact of currently known lease termination, retention and severance costs associated with Demo, One Thousand Steps and the Anaheim distribution center, the company now expects EPS in the range of 11 cents to 14 cents for the fourth quarter. Looking only at the PacSun business, earnings would be in the range of 29 cents to 32 cents.
Zumiez, Inc. posted less than stellar results for fiscal December, as the consumer buying trend many analysts predicted, one in which the weeks between the Thanksgiving and Christmas holidays have less draw than in the past, hurt the retailer in the mall. Following the slow turnout mid-month, the retailer was forced to lower its earnings guidance by approximately 11% for the full fiscal year. ZUMZ saw comparable store sales for the month of December increase 3.9%, but well off the 11.5% growth seen in the year-ago month. Comps were negative in the first three weeks of fiscal December, before turning double-digit positive for the two weeks after Christmas. An increase in average unit retail helped drive the comp store sales gain, while new stores added to the overall sales growth for the month.
Total sales for the period increased 15.3% over fiscal December period last year to $72.0 million compared to $62.5 million for the same period last year.
ZUMZ noted that comps for a comparable five-week period would have jumped 18.4% when excluding the impact of the 53-week year in 2006. The company offered a bit more detail than usual on a category breakout, saying that men's, juniors and accessories all comped positive for the month, but those strengths were somewhat offset by negative same-store sales in shoes, skate and snow hardgoods.
Looking at the years end, Zumiez now anticipates fiscal 2007 diluted earnings per share in the range of 82 cents to 83 cents compared to fiscal 2006 earnings per share of 73 cents. Earlier guidance held the company reaching diluted earnings per share of 92 cents to 94 cents per diluted share. The company attributed the reduced guidance to “lower than planned sales and to a lesser extent lower than planned gross margins,” offset slightly by expected reductions in SG&A. The new guidance assumes a low-single-digit same-store sales increase for January.
The TJX Companies, Inc. reported that comps increased 3% at Bobs Stores for the fiscal month.
Looking forward to January, ICSC forecasts comp chain-store sales will increase 1.5% to 2.0% on top of the 3.7% improvement for January 2007.
