The retail fiscal second quarter saw consolidated results surge across the board against a year-ago period when retailers were forced to promote heavily to flush out overstocked inventories. Consolidated inventories inched up for the quarter the year as retailers cautiously stocked their shelves to accommodate consumers that finally appeared to be returning to the aisles.
Consolidated sales for the publicly-traded retailers tracked by Sports Executive Weekly improved a healthy 5.8% over the year-ago period, representing slightly slower sequential sales growth than the nearly double-digit boost reported for the fiscal 2010 first quarter. Fifteen retailers, or just more than 68% of those tracked, reported comp growth for the fiscal second quarter as compared to only three, or about 17% of the total, in the year-ago period. Total earnings during the quarter improved by more than half while margins increased by an average of 305 basis points.
Also indicative of a healthy quarter was the fact that the Sporting Goods sector, which was the largest segment from a net sales standpoint, also reported the highest sales increase (+6.1%) of the three major channels. In fact, with the exception of Cabela’s, which anniversaried against a year-ago period that was inflated by guns/ammo sales, every retailer tracked within the Sporting Good channel exhibited sales growth. Excluding Cabela’s, the Sporting Goods channel surged 8.9%. Also of note, Dick’s SG, which had the most sales of all reporting retailers for the quarter, saw impressive 8.8% growth on improving comps in both of its chains.
Canadian retailer Forzani also turned in an impressive quarter, as sales jumped more than 16% in constant currency on strength generated from World Cup sales and Nike’s Livestrong apparel. Gross margins for the Sporting Goods channel edged up 65 basis points while earnings soared an average of 38.2% from the year-ago period.
The Specialty segment, which includes heavy hitters like Foot Locker, Adidas retail and The Finish Line, saw consolidated revenues improve 2.8% on remarkable strength from Adidas (+23.9%), which benefitted from World Cup sales along with a timely revitalization of the Reebok brand. The Specialty segment had plummeted more than 11% in the year-ago period when eight retailers, or about 67% of the total, had reported sales declines.
For the second fiscal quarter of 2010, gross margins for the Specialty segment improved by an average of 300 basis points and earnings nearly doubled. Excluding red-hot Lululemon, which has seen more than 40% comp growth for the year-to-date period, earnings for Specialty retailers were still up a very-respectable 76% for the quarter. It was certainly a far cry from the year-ago period, when ten of the 11 tracked retailers reported drops earnings. Pacific Sunwear, which has struggled lately due to a woeful Juniors business, was down 10.1% for the quarter.
Ironically, The Buckle, which was the only chain reporting earnings growth a year ago, was one of the four chains within the Specialty segment reporting declines this year. Fiscal 2010 comps for the mall-based teen retailer have struggled against tough year-ago comparisons.
For the Family Footwear segment, consolidated sales swung more than ten percentage points from the year-ago period, as growth from every reporting retailer boosted total revenues 5.6% for Q2. Most of the gain came from double-digit growth from Famous Footwear (+10.6%) and DSW (+12.4%), while Payless, which had more than double the sales of any other retailer in the sub-segment, edged up 0.6%. Average earnings for the segment nearly doubled despite declines from Stride Rite (-31.4%) and Payless (-25%).
Looking ahead to the third quarter, mixed results from back-to-school and weakness in the supply chain may slow the top-line gains a bit but margins should hold as retailers cut back on promotional cadence and inventories remain clean across most of the market.
