Macy’s and Kohl’s post disappointing results in June
New York — Analysts expected 18 top retail chains to report a modest gains in June, as high unemployment and falling consumer confidence have taken a toll on spending.
Among the department store retailers reporting June same-store results so far, the results were largely mixed. Macy’s was among the retailers reporting sales that fell short of estimates. Same-store sales rose 1.2% in June, missing Wall Street’s projected 1.9% gain.
“June sales were below expectations,” said Terry J. Lundgren, chairman, president and CEO. “In part, this was a function of a macroeconomic environment that is stagnant at best, and lower spending by tourists in cities such as New York. Additionally, the unprecedented renovation at Macy’s Herald Square in New York City, the world’s largest store, is well under way but created more short-term business disruption than anticipated in the June sales period.”
The operator of Macy’s and Bloomingdale’s generated total revenue in June of $2.41 billion, representing a slight 0.8% gain.
Kohl’s Corp. was also challenged in June, reporting a same-store sales decline of 4.2%, after Wall Street had forecasted just a 3.2% drop. Total sales for the month decreased 2.6%.
“Though June sales were again lower than expectations, we are encouraged by improved sales in the latter weeks of the month as we continued to build inventory levels,” said Kevin Mansell, president and CEO.
Among other department store retailers reporting so far:
- Nordstrom same-store sales rose 8.1% in June, solidly beating Wall Street’s expected 4.7% gain;
- Saks rose 6%, surpassing the forecasted 4.7% rise; and
- Bon-Ton Stores same-store sales dipped .8% in June.
Retail sales lackluster in June, specialty stores hit and miss
New York — Disappointing same-store sales results in June weren’t necessarily unexpected, as the month typically trends weaker as shoppers have fewer reasons to shop.
Thomson Reuters, which polls 18 U.S. retail chains, projected its Same-Store Sales Index to inch up 0.5% in June, far below last year’s 6.7% rise for the month. Analysts have said that warm weather may have prompted consumers to make summer apparel purchases earlier than usual, shifting sales from later months like June.
Just before the July 4th holiday, the International Council of Shopping Centers trimmed its earlier June same-store sales forecast of a 1.5% to 2% rise to an even more conservative 1% to 1.5% increase.
Among the specialty store retailers, the results were hit and miss. The Limited was the big winner with a 7% rise in June same-store sales, handily beating Wall Street’s forecasted 2.4% rise. The parent to Victoria’s Secret, Pink, Bath and Body Works, La Senza and Henri Bendel said its total June sales, however, remained nearly flat at $1.1 billion.
Wet Seal and Buckle posted the weakest results in the category, with declines of 9% and 2.5% respectively.
Gap reported flat same-store sales in June, just missing the .1% gain projected by Wall Street. Overall sales for the month increased 2%.
“We’re pleased with our overall sales performance in June, especially the continued positive trend in our North America business,” said Glenn Murphy, chairman and CEO, Gap Inc.
Other specialty store results announced so far included Zumiez, which saw same-store sales rise 8.2% in June, narrowly missing analysts’ predicted 8.4% gain.
Walgreens in deal to acquire USA Drug chain for $438 million
Deerfield, Ill. — Walgreens Co. has entered into an agreement to acquire Stephen L. LaFrance Holdings Inc., the owner and operator of the USA Drug chain, for about $438 million, gaining stores in several Southern states. The acquisition comes on the heels of Walgreens’ announcement that it was buying a 45% stake in Alliance Boots GmbH for $6.7 billion last month to expand globally.
The transaction gives Walgreens 144 stores under several banners, including USA Drug, Super D Drug, May’s Drug, Med-X and Drug Warehouse. The acquired stores are located in Arkansas, Kansas, Mississippi, Missouri, New Jersey, Oklahoma and Tennessee.
The deal also includes corporate offices and a distribution center located in Pine Bluff, Ark., and a wholesale and private-brand business. It is expected to close Sept. 1.
Walgreens said that the acquired drug stores will continue to operate under their current brand names after the transaction closes. The chain said decisions will be made over time regarding the best, most effective way to harmonize Walgreens and the acquired brands.
“This acquisition expands our business in an important region of the country,” Walgreens president and CEO Greg Wasson said. “It will provide significant new pharmacy business for us in this region while also enabling us to bring the Walgreens experience to many additional smaller communities where USA Drug has developed strong operational expertise.”
Stephen LaFrance, who serves as owner and chairman of Stephen L. LaFrance Holdings, said the decision to sell the chain — which recorded sales of $825 million in 2011 — was “not only because it is the premier drugstore company in [our] industry, but also because Walgreens will continue to provide [our] customers with the service and products they have come to expect.”
The transaction is structured as a purchase of the stock of Stephen L. LaFrance Holdings, which owns most of the acquired business, and also includes the purchase of assets or stock of certain affiliated companies or stores and other parts of the business that are not owned by that holding company.