Discounting lifts June sales

New York City -- Most retailers surprised Wall Street with better-than-expected monthly sales results in June, as bargains led shoppers to spend more. June is the second most important month on a retailers' sales calendar behind December. It is June that stores typically clear out summer merchandise to make room for fall goods.

Analysts polled by Thomson Reuters expected a 4.9% rise in June same-store sales, compared with a prior-year increase of 3.1%. Of those retailers who have reported, most are on pace to beat expectations. However, margins will likely show a squeeze as leading retailers were forced to offer deals to prompt spending, a trend that isn’t likely to abate as back-to-school season approaches.

"While consumers showed a willingness to spend, July is where consumers can pull back and think about where they can get bargains," David Bassuk, a managing director at consulting firm AlixPartners, told Reuters.

In the apparel sector, one of the strongest performers in June was Limited Brands, which blew past the predicted 3.8% June gain with a 12% increase in sales, led by a 17% gain from its Victoria’s Secret division. The Buckle also turned in impressive results, with its same-store sales rising 10.8%, edging Wall Street estimates of a 10% gain. Total revenue rose 15.2% to $79.6 million for the four weeks ended July 2.

Gap also showed positive movement, growing same-store sales 1% and total sales 5% in June to $1.38 billion.

“Our multiple growth initiatives are on track, and we’re taking the necessary steps in North America to grow top line sales in the back half of the year,” said Glenn Murphy, chairman and CEO of Gap.

In other apparel same-store results for June:

  • Zumiez reported a 9.8% increase in sales, beating Wall Street predictions for a 5.6% increase.
  • Wet Seal beat estimates, with a 7.3% increase.
  • Bebe Stores same-store sales rose 7%.
  • Cato same-store sales increased 1%.
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