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.
TJX, Ross continue discounter dominance
FRAMINGHAM, Mass. and PLEASANTON, Calif. — Fashion discounters continue to thrive in this economy, with TJX and Ross Stores continuing to report impressive monthly sales results.
TJX reported June sales of $2.3 billion, an increase of 9% over the $2.1 billion achieved during the same period last year. Consolidated comparable-store sales for the five-week period increased 7% over last year.
Carol Meyrowitz, CEO of TJX., stated, “We are very pleased our strong trends continued in June. Our 7% consolidated comparable store sales increase significantly exceeded our expectations and was achieved over 5% growth last year. It is great to see such consistent, strong performance across the Company, with all of our businesses in the U.S., Canada and Europe continuing to deliver excellent results. Customer traffic during the month increased substantially at every division which speaks to the tremendous appeal of our values, brands and fashions for consumers.”
Based on its strong performance in June, TJX is now expecting its quarterly earnings per share to be in the range of 52 cents to 53 cents, which would represent double-digit growth on top of double-digit growth in last year’s second quarter. The company is also raising its full year EPS guidance to $2.31 to $2.39.
Ross Stores monthly sales rose 12% to $886 million, up from $793 million for the same period last year. Comparable-store sales for the month grew 7% on top of a 5% increase last year.
Michael Balmuth, vice chairman and CEO, commented, "We are pleased with our better-than-expected June sales. Our ongoing ability to deliver terrific name brand bargains to today’s value-focused shoppers drove broad-based merchandise and geographic sales gains during the month."
Ross has raised its EPS guidance for the second quarter to range of 77 cents to 78 cents from its previous guidance of 72 cents to 75 cents.