It appears as though July is settling in to become even more of a “tweener” month at retail as the back-to-school season moves closer to, or even after, the start of classes and retailers struggle to balance the desire for lean inventories and the need to anniversary clearance sales from the year before. With inventories tight at the retail level, some speculate there was not enough on the floor to hit July expectations.
The International Council for Shopping Centers also pointed to strong motor vehicle demand and warmer weather in their survey of July sales at 71 chain stores. The ICSC report showed a 3.6% increase for the month, which was below the 5.2% in June. Michael Niemira, ICSC's chief economist and director of research, had forecast a 4% to 5% comp sales gain for the July period and the consensus estimate was pegged at a 4.2% increase for the month.
“The July chain store sales performance was softer than we expected, but continued to be in line with the fiscal year-to-date trend,” said Niemira. “More importantly, taken together with the promotional-led surge in vehicle demand in July, consumer spending continued to be strong.”
Retail Metrics July index based on results at 64 retailers was in line with the ICSC report, indicating that July comp sales rose 3.7% versus the year-ago period. They reported that just over 50% of the companies came in below their July forecasts.
“Sales fell short of expectations. Strong sales in June left stores with very little inventory,” said Ken Perkins, president of Retail Metrics LLC, in a published report. “Hot weather hurt sales of fall clothing.”
ICSC reported that wholesale clubs and drugstores were the leading performers for July, with gains of 5.0% and 4.6%, respectively. Luxury stores again posted strong results, comping up 4.7%, but there were some issues at the higher-end. Nordstroms 3.6% increase for the month fell short of the 5.4% estimate and JWN shares took a beating, closing on Friday at $31.99, or down 13.6% for the week. Saks, Inc. disappointed as well, posting a 0.3% consolidated gain for the month against expectations of a 2.2% increase. The SKS number was hurt by a decline in their mid-tier stores group, which posted a 3.1% decline for the month, while the luxury Saks Fifth Avenue stores posted a 4.1% gain. Neiman Marcus had an 8.8% increase in same-store sales, better than the 6.8% estimate, but the month was helped by strong catalog sales that hid a 3.9% increase at the stores.
Overall Department Stores sales rose 0.6% for the month. JC Penney had a 1.6% gain in same-store sales in its department store business, less than the 2.4% estimate, and well below last years 8.1% performance. Federated had a 0.9% decline in same-store sales, well short of the 1.1% gain estimated by analysts.
The ICSC report indicated that sales at Footwear Stores declined 2.0% for the month.
Shoe Carnival reported that July sales decreased 0.4% to $46.2 million from $46.4 million in July last year. Comp store sales decreased 4.8% for the month on top of a 6.3% decline in the same month last year.
The women's business continues to thrive at Shoe Carnival, posting a high-single-digit gain for the month. “We are especially excited about the progress we have made with respect to re-establishing our women's non-athletic business,” said Lemond. He indicated that womens represented 26.2% of total sales in Q2, up from 23.5% last year for the same period.
The men's business was up mid-single-digits, but children's, which includes children's athletics, was down in the low teens. Men's and women's athletics were both down high-single-digits. Total footwear comps were down 4.6% for the month and accessories were down high-single-digits.
Total comp inventories were flat with last year.
Based on the slower-than-expected start of back-to-school reflected in the July sales results, Carnival now expects Q2 diluted EPS in the 19 cents to 20 cents per share range.
SCVL shares fell 28.7% for the week to close at $17.66 on Friday.
DSW Shoe Warehouse reported that July sales rose 15.3% to $69.4 million from $60.2 million in July last year. Comp store sales were up 1.5% on top of a 1.4% increase last year.
Payless ShoeSource reported that same-store sales decreased 2.4% during July while sales totaled $177.9 million, a 3.5% decrease from $184.4 million during fiscal July of last year.
The results at teen retailers were again mixed for the month as the fickle consumer group continues to trade loyalties between stores. Perhaps the biggest injustice of the week was the sharp fall in shares of Abercrombie & Fitch, which posted a 22% comp sales increase for the month. Analysts backed off because the otherwise stellar performance fell short of their expectations for a 28% increase.
Pacific Sunwear reported that total sales for July increased 14.2% to $111.1 million, compared to $97.3 million in July last year. Total company same-store sales increased 4.0% in July, with PacSun stores posting a 4.3% comp gain and d.e.m.o. stores reporting a 1.1% increase versus last year. Total comp transactions were up in low-single-digits. The average ticket per comp store was up in low-singles, driven by a mid-single-digit increase in average unit retail.
At PacSun, the guys business was up in mid-singles, driven by denim, polos, t-shirts, and accessories. Wovens and long-sleeve tees were weaker. Girls comps were up in mid-singles as well, driven by “very strong” sales in swim, shorts, capris, and skirts. The sandal business was said to be “very difficult.”
d.e.m.o. guys sales were down in low-singles, while the girls business continues to dominate, posting a comp sales increase in the high-teens.
Zumiez total net sales for July increased 28.4% to $13.7 million, compared to $10.6 million for the year-ago period. Comparable store sales increased 12.7% for the month on top of a 4.4% gain in July last year.
The Buckle posted a 1.4% sales gain for the month to $35.2 million versus sales of $34.7 million in the same month last year. Comps were down 3.3% versus a 2.4% increase in July 2004.
ICSC expects total August same-store sales to increase by 4% versus the year-ago period.
