The first quarter marked a slight emergence for the overall retail market after a treacherous back-end of 2008, but a cash-strapped consumer continues to pinch pennies and the economy continues on its winding and languid track back to normalcy.
Top-lines for the overall public company retail market tracked by Sports Executive Weekly slipped low-single digits, with slight growth from the sporting goods segment more than offset by low to mid-single digit decreases at mall specialty. The International Council of Shopping Centers, which tracks 32 retail-chain stores, found that consolidated same-store sales for the first quarter of 2009 were down 0.5%. The ICSC report includes Wal-Mart, which stopped reporting monthly results after the first quarter. Excluding Wal-Mart, total same-store sales for the first quarter fell 2.7%.
Overall gross margins for retailers tracked by SEW was essentially flat on a year-over-year basis. Excluding The Buckle – which posted a 250 basis point improvement – gross margins were down 25 basis points. Overall net income was up 279% to $95 million from $25 million a year ago.
Boosting consolidated sales for the sporting goods segment was mid-single digit top-line growth from Dicks Sporting Goods, which saw strength from athletic footwear and in-house golf equipment on promotions supported by vendor support. The gains there offset softness in the team sports business. Margins for the retailer fell 230 basis points on a 6% slip in same-store sales. Golf Galaxy, which was acquired by DKS more than two years ago, saw comps fall in the mid-teens for the quarter. Excluding Dicks SG, the sporting goods segment would have posted low-single declines in consolidated revenue with margins sliding 45 basis points. DKS had the opposite affect on margins. Including the impact of Dicks SG, consolidated margins were down 85 basis points for the sporting goods segment.
Segment strength at Dicks SG mirrored that of the entire sporting goods channel, where retail point-of-sale data compiled by SportScanINFO suggested that sports retailers saw sales of athletic footwear up mid-singles. Golf equipment among sports retailers was up in low-single digits for Q1.
The sporting goods segment also benefited from strong first quarters from Cabelas and Gander Mountain, both of which saw top lines boosted by an industry-wide spike in firearms and ammunition that arose in the back-half of 2008 that many attribute to the changes in the political structure in Washington, DC. It will be interesting to see how these trends play out for the balance of the year and the impact on the market. Already, SportScanINFO is reporting that gains in firearms sales have moderated from a very strong double-digit gain in Q1 to mid-teens growth in the more recent periods.
The mall environment took the biggest hit during the quarter as consumers shied away from higher-priced specialty stores in favor of deep discounters such as TJ Maxx and Wal-Mart. Significant top line declines from Foot Locker and The Finish Line – each of which saw high-single digit weakness in revenues – negatively impacted consolidated top lines for the segment for the quarter. One of the few bright spots was The Buckle, which continues to enjoy double-digit top line and comp growth from a less reactive teen market. Genesco – boosted by strength from its Journeys and Hat World businesses – and Lululemon also posted growth in a tough quarter. Gross margins for the mall segment actually improved 35 basis points, but excluding The Buckle, margins fell 15 basis points.
Family footwear declined low-singles, reflected high-single digit top-line declines from Payless. The Internet/Team/Catalog channel saw fractional declines in the top-line, but gross margins plummeted 465 basis points.
