Heavy discounts make for mixed results among specialty apparel retailers in July
New York City Deep discounts and hot weather drove shoppers into stores in July, but they remained cautious, resulting in only modest gains for specialty apparel retailers. The sluggish spending raised worries about the health of the important back-to-school season.
July marks the fourth straight month of weak spending after retailers got a surprise bounce earlier in the year amid a rising stock market and government incentives. But confidence is falling as worries grow that the economic recovery is stalling.
July also marks the end of most retailers’ fiscal second quarter. However, it is considered the least important month in the quarter because stores use it to clear out summer leftovers and bring in fresh fall merchandise.
Among the hardest hit in July were select teen retailers. The Buckle reported a 9.3% drop in its July same-store sales, bigger drop than the 1% that analysts expected. The Wet Seal posted a 4.3% drop, worse than the 3.4% decline expected.
“Weak traffic trends and a highly promotional environment continue to pressure sales,” said Ed Thomas, CEO of Wet Seal, in a statement.
Aeropostale, a strong performer during the recession, reported a 1% increase for July same-store sales, far below the 7.1% increase expected by Wall Street. As a result, it trimmed the top part of its earnings guidance for the second quarter, citing “challenging retail environment [and] a change in consumer shopping behaviors.”
Several chains, however, did better than expected. Limited Brands reported a 12% gain in July same-store sales, more than double what analysts expected. The company raised second-quarter net income guidance. Analysts surveyed by Thomson Reuters, on average, expected a 5.2% gain.
Abercrombie & Fitch also came in better then expected as sales rose 7%. Analysts, on average, had expected same-store sales to rise 4.1%.
Gap also exceeded expectations with a 1% rise in same-store sales. Analysts had expected same-store sales to rise 0.1%. Sales were strongest at Old Navy and Banana Republic. The company’s international stores also did better than expected.
In other same-store sales results for July:
- Zumiez reported a 9.4% increase, better than analysts expected. The chain boosted its second quarter outlook;
- American Eagle Outfitters said Thursday that its sales were flat, coming in slightly better than the 0.2% decline that analysts had predicted;
- Hot Topic projected a bigger-than-expected loss after its sales dropped 9%, worse than the 2.6% drop analysts estimated;
- At Cato Corp. sales were up 2%; and
- Ross Stores’ sales rose 2% in July, below expectations. Total sales for the month increased 7% to $573 million.
Whole Foods 3Q sales up 15%
AUSTIN, Texas Whole Foods Market reported that sales for the third quarter ended July 4 increased 15% to $2.2 billion. Comparable-store sales increased 8.8%, or 6.3% on a two-year stacked basis. Identical-store sales, excluding three relocations, increased 8.4%, or 4.6% on a two-year stacked basis.
Income available to common shareholders increased 88% to $65.7 million from $35 million last year,and diluted earnings per share increased 53% to 38 cents.
“We are pleased with our results which compare very favorably to most other food retailers and show we are continuingto gain market share. Our identical-store sales increased 8.4%, accelerating from the second quarter and our highestincrease since 2006. Despite tougher comparisons and the recent dip in reported consumer confidence, our two-yearstacked identical-store sales also sequentially increased to 4.6%,” said John Mackey, co-chief executive officer and co-founderof Whole Foods Market.
DSW reports quarterly sales growth
COLUMBUS, Ohio DSW announced net sales for the second quarter ended July 31 increased 12.3% to $415.1 million compared with $369.5 million for the quarter ended Aug. 1, 2009. Same-store sales increased 12% for the comparable period versus a decrease of 2.9% last year.
The company said it now estimates an annual comparable-store sales increase of approximately 7% to 9% and annual diluted earnings per share of approximately $1.80 to $1.95 for fiscal 2010. This is updated from the company’s previous estimate of an annual comparable store sales increase of approximately 6% to 8% and annual diluted earnings per share of approximately $1.65 to $1.75 for fiscal 2010. Fiscal 2009 annual diluted earnings per share were $1.23.