June Retail Results Mixed as Consumer Retrenches

 

Based on data compiled by an International Council of Shopping Centers¡ survey of 31 chain stores. June comp store sales results rose 3.0% figure that was seen at the low end of the 3% to 4% estimate for the month.  The June results fell short of the year-to-date trend of 3.8% growth and failed to offset the 5.1% decline in the year-ago period. 

 

The other troubling issue is that June was supposed to get a boost from the later Memorial Day holiday this year, which supposedly held the May results in check. Michael P. Niemira, ICSC's chief economist, estimates that the shift in the holiday lifted June results by one percentage point and deflated May by the same percentage.

 

But what appears to be worrying the market the most is that after snapping up incentives for big-ticket purchases like cars and homes, the consumer has moved back into a more conservative spending mode and is spending only on essentials.  The renewed skittishness on the part of the consumer is in sharp contrast to the mood in the first quarter that saw many consumers come out of their shell and start buying after putting purchases on the shelf for more than a year.

 

“If we don't get employment growth, it will continue to be choppy, and worry will grow,” Niemira said.

 

The best reported results of the month came from the Department Store sector, which posted a 5.9% increase in comp store sales for the month, but that came against a very weak June 2009 period that saw the Department Store sector fall 9.1% on a comp basis from the prior year.  The increase was driven in large part by the Luxury segment of the business, but also saw decent gains in the Mid-Tier segment, led by Kohl's (+5.9%) and JC Penney (+4.5%).  Nordstrom was the clear leader with a 14.1% comp store sales increase for the month ¨C and along with Kohl's the only two Department Store retailers to more than offset the monthly declines of a year ago.

 

ICSC said Weather Trends International reported that “June was the second hottest June in, at least, the last 18 years” and was a catalyst for summer apparel demand.  They noted JC Penney reported that ¡°key apparel businesses showed even stronger underlying trends in the June period, with mid-teen percentage increases in regular and promotional sales across men's, women's and children's apparel categories. These sharp sales gains were partially offset by “lower clearance sales” due to less inventory to clear.

 

The Teen Retail sector saw a continued rough environment, with only Aeropostale posting a solid increase on top of a strong year-ago result.  Abercrombie & Fitch and Zumiez were the only other two Teen Retailers that comped positive for the month, but still fell well short of prior-year declines.

 

Zumiez reported comparable store sales increased 10.9% for the five-week period ended July 3 versus a 19.3% comp sales decline in the year-ago month, driven by an increase in comparable store transactions. ZUMZ said that dollars per transactions were down due to a decrease in average unit retail partially offset by an increase in units per transaction. Total net sales for the month increased 16.4% to $37.2 million from $32.0 million in fiscal June 2009.

 

ZUMZ reported stores in the western half of the U.S. comped up about 10%, while stores in the Midwest, Northeast and South comped up in the high-single digits with the difference coming from e-commerce sales. Men's, accessories, boys and juniors posted positive comps, partially offset by negative comps in hardgoods and footwear. ZUMZ management said they believe the shift in Memorial Day from week four of May last year to week one of June this year, along with the Fourth of July holiday shifting from the last Saturday in fiscal June last year to the first Sunday in fiscal July this year, provided a low-single digit benefit to June's comparable store sales.

 

The Buckle reported that June comparable store sales decreased 7.3% in comparison to the prior-year June period.  Total net sales decreased 2.4% to $69.2 million compared to net sales of $70.8 million in the prior-year fiscal June.

 

On the men's side of the business, which represented approximately 42.5% of total sales for the month, total sales were flat in comparison to last year¡¯s month but overall price points on the men's side of the business were down approximately 2.5% for the period. The men's business was approximately 41.5% of total sales last June.  Positive categories on the men's side included denim and woven shirts.

 

In women's total sales for June were down approximately 4.5% from the prior-year period. The women's business represented approximately 57.5% of total sales for the month versus approximately 58.5% in the prior fiscal June.  Positive categories on the women's side included active apparel and accessories. For the fiscal month, overall price points on the women's side of the business were up approximately 3%.

 

Accessory sales for the fiscal month increased approximately 4.0% in comparison to the prior-year fiscal June, while footwear sales decreased approximately 6.5%. The two categories accounted for approximately 9.0% and 5.0% respectively of the current fiscal June's net sales compared to approximately 8.5% and 5.0%, respectively, in June last year.  Average accessory price points were up approximately 6%, and average footwear price points were up approximately 4% for the fiscal month.