Club channel comps not as solid as they seem
ISSAQUAH, Wash. and WESTBOROUGH, Mass. — Costco and BJ’s reported some impressive same-store sales for June, but peel the onion back a bit and the numbers are not quite as stellar as they seem. Sam’s Club does not report monthly sales.
Costco reported a stunning 14% same-store sales increase in June, but that figure benefitted from a number of factors unrelated to selling an increased volume of goods. For starters, there is the issue of gas price inflation and strengthening foreign currencies, which inflated the comp figure. These beneficial effects enabled Costco’s U.S comp to hit 12%, and its international comp was 18% for the combined total of 14%. Strip out gas inflation and currency impacts and those figures drop substantially, with the U.S. comp dipping to 8% and the international figure cut in half to 9%. Then there is the issue of this year’s June reporting period including an additional day when compared to last year. This anomaly aided total sales and comp sales to the tune of 2% to 3%.
Costco’s total sales for June increased 18% to nearly $8.7 billion, bringing the company’s total sales for the first 44 weeks of its fiscal year to $73.4 billion, a 14% increase from the prior year.
Meanwhile, BJ’s said its June comp increased 7.3%, but strip out the impact of higher year-over-year gas prices, and the gain from merchandise sales was a more modest 3.5%. Total sales at BJ’s increased 10.3% to nearly $1.2 billion and through the first 22 weeks of the company’s fiscal year its total sales are up 10.2% to $4.9 billion.
The issue of food price inflation also had an undetermined, but positive impact on comps, as both companies passed through higher costs to consumers.
BJ’s ended June with 190 clubs in 15 states, while Costco ended the period with a total of 584 worldwide clubs. Its store base is comprised of 427 units in the United States and Puerto Rico, 81 clubs in Canada, 32 in Mexico, 22 in the United Kingdom, eight in Japan, seven in Korea, six in Taiwan and one in Australia. Costco plans to open up to eight additional warehouses prior to the end of its 2011 fiscal year on Aug. 28.
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%.
Kmart cooks up a deal with Gordon Ramsay
HOFFMAN ESTATES, Ill. — Kmart that it will be the exclusive retailer for the new Gordon Ramsay Everyday kitchen collection. The collection will debut in stores this fall and will include cookware, dinnerware, cooking utensils and small kitchen appliances.
"We are thrilled to collaborate with Gordon Ramsay on the Everyday line, allowing us to offer Kmart customers kitchen products made to his exacting standards as a professional chef," said John Goodman, EVP apparel and home for Sears Holdings. "Anyone who has watched Gordon in action knows that he’ll accept nothing less than the best—which is exactly the caliber of home products we want to offer our customers, along with compelling value. The addition of quality cookware to our overall portfolio of trusted brands marks an unprecedented step at Kmart in combining true culinary expertise with accessibility in this category."
Ramsay is a celebrity chef who stars in such culinary competition shows as "Hell’s Kitchen" and "MasterChef." He is also the owner of several highly-regarded restaurants across the globe.