July, a “Transitional Month,” Posts Sluggish Comp Sales

Only a handful of major retailers still release monthly sales results

Only a handful of major retailers still release monthly sales results

New York—About six months ago, harsh winter weather stymied retail sales. But now it seems that warmer weather may be in factor in the sluggish monthly retail sales reported today.

While the month marks the start of the crucial back to school season, it traditionally is a slower time at retail. Ken Perkins, president at Retail Metrics, said traffic was generally sluggish in the back half of July but cautioned against reading too much into the month’s results as July is “typically a transitional month” with sales driven by summer clearance ahead of the back-to-school shopping period.

His research firm Retail Metrics projected an overall gain of 4.5% year-over-year, below the 5.5% sales gain posted in June.

Another preliminary reading of the Thomson Reuters sales index indicated retail sales rose 4.1% in July, excluding newly opened and closed stores. Factoring in Gap, Thomson Reuters had projected the eight retailers it tracks to post 4.2% growth versus a 3.3% increase a year earlier.

Traffic Drop

Whatever the cause, retailers will be continuing to battle a fall in traffic which is weighing on sales and prompting chains to slow store openings.

Shopper visits fell nearly 5% in July, according to ShopperTrak, a data firm that records store visits for retailers using tracking devices installed at 40,000 U.S. outlets. Visits have slipped by 5% or more from a year earlier in every month for the past two years, aside from a small uptick in April, according to the data firm.

Many retailers, including the major department stores and most big-box retailers such as Walmart, Macy’s, JCPenney etc., stopped reporting monthly sales some time ago, making it difficult to get a snapshot of the health of the entire industry. Nonetheless, the reported numbers do provide a kind of interim report on the quarter’s performance at the country’s retail stores.

Though retailers provided few details about their back to school business, investors are hoping for some forecasts when some of the retail sector’s big guns—Walmart Inc., Macy’s Inc., Kohl’s Corp. and JCPenney—report second-quarter financial results next week.

Among the retailers still reporting monthly sales today includ

●L Brands Inc. said July sales rose 6%, easily beating the 1.8% consensus estimate

Quarterly net sales rose 6% to $2.68 billion, while analysts polled by Thomson Reuters were expecting sales of $2.63 billion.

Sales excluding newly opened or closed locations rose 3% for the quarter. For the four weeks ended Aug. 2, sales by that metric rose 6%, easily beating the 1.8% consensus estimate. Helping the July results was a 7% increase at Bath & Body Works. Analysts had estimated only 0.9% growth. Victoria’s Secret, meanwhile, recorded 5% growth, topping expectations for a 2.7% increase.

L Brands forecast its second quarter earnings on the high end of its previous outlook

The retailer had forecast earnings of 57 cents to 62 cents a share, including a charge for severance of about two cents a share.

Quarterly net sales rose 6% to $2.68 billion, while analysts were expecting sales of $2.63 billion.

●Gap Inc. today topped expectations as higher sales at Banana Republic and Old Navy offset declines at its Gap stores.

July net sales increased 5% to $1.17 billion compared with net sales of $1.12 billion for July 2013.

For its second quarter Gap Inc.’s net sales increased 3% to $3.98 billion compared with $3.87 billion for the second quarter last year.

“We’re pleased to close out the first half of the year with a positive comp in July and look forward to the new product and marketing campaigns our brands will launch this fall,” said Glenn Murphy, chairman/ceo. “We’re pleased to close out the first half of the year with a positive comp in July and look forward to the new product and marketing campaigns our brands will launch this fall.”

Comp store sales were up 2% versus a 1% increase last year. Comparable sales by global brand were: Gap Global: negative 2% versus positive 7% last year; Banana Republic Global: positive 6% versus negative 1% last year; and, Old Navy Global: positive 3% versus negative 5% last year.

For its second quarter, Gap Inc. expects earnings per share of 73 to 74 cents. This compares to earnings per share for the second quarter 2013 of 64 cents.

●Buckle Inc. announced that comparable store net sales for July increased 0.5%. Net sales increased 2.3% to $79.0 million from net sales of $77.2 million.

Comparable store sales decreased 0.5% while net sales increased 1.4% to $235.7 million from net sales of $232.5 million for the prior year.

Quarterly sales decreased 0.7% from comparable store net sales for the 26-week period ended August 3. Net sales for the 26-week fiscal period increased 1% to $507.4 million from net sales of $502.2 million for the prior year.

●Zumiez Inc. announced that total net sales for July increased 11.9% to $62.8 million, compared to $56.1 million last year. Comparable sales increased 3.5% compared to a comparable sales increase of 0.8% in July 2013.

●Cato Corp. says its July sales rose 6% to $65.3 million while comp store sales were up 4% from a year earlier.Net sales for the month were $61.6 million.

Sales for the second quarter ended Aug. 2 totaled $243.8 million, up 6% from sales of $229.4 million a year earlier. Comp store sales increased 3%.

“July same-store sales were in line with our year-to-date trend,” says John Cato, chairman, president and chief executive.

The retailer anticipates its second-quarter earnings will be in the range of 50 cents to 53 cents a share, compared with 51 cents a share a year ago.

●Stein Mart Inc. reported a rise in sales for July, helped by early fall receipts in the second half of the month. July sales increased 1% to $75.3 million from $74.6 million a year earlier. July comparable sales increased 0.8%.

Women’s apparel performed the strongest, while the company’s stores in California reported the highest amount of sales. The Northeast and Midwest were more challenged.

Second-quarter sales rose 2.5% to $298.1 million from $290.9 million a year earlier. Comparable store sales for the second quarter increased by 1.3%.

CEO Jay Stein said the second quarter increase marks the company’s ninth consecutive quarter of positive sales.

“July sales trended higher in the second half of the month driven by early fall receipts. We continue to have a positive outlook for 2014 as the underlying fundamentals of our business and growth strategies remain in place,” he said.

●Costco posted a 5% increase in July sales, excluding gasoline, falling short of analysts’ estimates for 6% growth as foreign currencies had a slightly negative impact.

Top-performing categories at Costco included apparel, jewelry, small appliances, fresh foods such as meat and produce, and food sundries such as candy. Consumer electronics sales edged up in the low single digits, the company said

The warehouse club chain, which has a hefty weighting in the Thomson Reuters sales index, has been a standout among retailers, though its growth has slowed somewhat. Today’s results mark the first time in five months that Costco’s sales have increased less than expected.

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Jeff Prine, Editor at Large, Accessories Magazine
Jeff returns as a regular contributor to Accessories magazine. Initially Jeff worked as senior editor at Accessories more than 20 years ago and his love of the industry has followed him until present. Since his tenure here, Jeff has continued to report jewelry, watch and other luxury goods trends as executive editor at Modern Jeweler magazine, fashion director at Lustre, and as contributor on products and trends for consumer and trade publications and websites. In addition to his editorial experience, Jeff also served as an adjunct instructor for accessories merchandising at Fashion Institute of Technology. jeffp@busjour.com