May Retail Comp Sales Better Than Expected

Warmer weather brought consumers out to shop in stores like Buckle in May.

Warmer weather brought consumers out to shop in stores like Buckle in May.

New York—While many retailers have been reporting recently that their first quarter sales were stifled by unseasonable cold, their predictions that May sales would be stronger appear to have materialized.

According to the comparable store sales reports for May released today, the nine retailers tracked by Thomson Reuters (down from 11 retailers in April) were expected to show a 4.7% increase compared to a 3.8% increase in May 2012.

Meanwhile, the International Council of Shopping Centers’ (ICSC) tally of 12 retailers found comp store sales rose 3.2% in May.

“Some underlying improvement in the U.S. economy along with an improving ‘wealth effect’ from rising stock and home prices is helping to lift the sales pace,” said Michael Niemira, chief economist at the ICSC.

At Retail Metrics, a research firm, May comp sales were projected to increase 3.5% compared to a 2% gain in May last year.

Several factor contributed to the May comp sales gains, economists cited. Among them: better-than-expected Mother’s Day sales, decline in gas prices, higher home values, slowly improving job market and improvement in consumer confidence.

“People who are in a job are comfortable with what they have, and stability leads to optimism,” Chris Donnelly, a managing director at Accenture, told Reuters.

Despite the improving situation in the U.S. economy, future increases are likely to be modest, some said.

Economists Question Validity of Monthly Reports

“We’re not seeing higher gains like we saw in the mid-2000s when the real estate market was on the rise,” said Ken Perkins, president of Retail Metrics. “So many consumers still have homes underwater and are still playing catch up.”

Others point to the fact that the dwindling number of retailers who report monthly sales may not be giving an accurate picture of what’s actually happening at U.S. retail. This month, for example, TJX Companies and Ross Stores ceased their monthly reports, joining a host of retailers including Walmart, Sears, JCPenney, Macy’s, Dillard’s, etc. (Gap Inc. reports its May figures after the close of the stock market this afternoon).

In 2006, when some 68 retailers reportedly monthly comparable store sales, figures may have been the most accurate. Now the 11 retailers who report monthly date represent only 6% of the $2.4 trillion retail industry sales.

“It’s just not representative of the industry at large,” said Joel Bines, co-head of the retail practice at AlixPartners consultants.

In fact, noting that the small sample size means operational issues at just one company could skew the overall results, Bines added.

Among the retailers still reporting their May sales include:

●L Brands (formerly Limited Brands Inc.) reported a total comparable store sales rise of 3% in May just missing the 3.2% increase analysts’ average estimate expected. Total sales rose nearly 10% to $737 million.

For the year to date, the parent of Victoria’s Secret, La Senza and Henri Bendel said comp store sales have increased 3%. Total revenue increased 6% to $3.01 billion.

●Cato Corp. said its May comparable store sales declined 2%. Total sales were down 3% to $81.7 million. Comp sales year-to-date decreased 4% while total sales have been down 4% to $348.9 million.
“May sales continued to be difficult although better than our current trend,” said John Cato, chairman/president/ceo.

American Apparel reported its May comparable store sales increased 10%, which included a 7% rise in comparable store sales in its retail stores and a 37% increase in net sales online. Total net sales were up 13% to $55.6 million. Wholesale net sales increased 22% during the month.

“May represents our 24th consecutive month of positive comparable store sales growth,” said Dov Charney, chairman/ceo. “We were pleased with the 37% increase in our online sales this month and our wholesale channel reported the highest sales month in its history. Recent strong trends in the imprintable wholesale business lead us to anticipate a double digit growth rate in that channel again in June.”

●Buckle, Inc. said its May comparable store sales increased 4.1% ahead of analysts’ average forecast for a 3.3% increase. Total net sales increased 4.2% to $72.8 million.

For the year-to-date, comparable store sales increased 1.8% while net sales increased 2.7% to $342.5 million.

●Zumiez Inc. reported a 1.1% increase in its May comparable store sales, falling short of a 2.3% increase that analysts had expected. Total sales for the month were up 16.7% to $43.6 million.

The company’s comp sales have been in a declining trend due to the continued fall in comparable store transactions, analysts report. Zumiez posted a 0.7% decline recently in its first quarter compared to an increase of 12.9% in the year-ago quarter.

●Stein Mart Inc. posted an 8.2% increase in its May comparable store sales. Total sales for the month increased 3.6% to $107.3 million.

Jay Stein, interim chief executive officer of Stein Mart said, “We are thrilled to announce our May comparable store sales increase of 8.2 percent, which was on top of a strong 8.0 percent increase in April,” said Jay Stein, interim chief executive.

Best performing categories were women’s casual and career sportswear. By region, sales were strongest in the Southeast. Weaker categories included dresses, men’s sportswear, women’s accessories and women’s special sizes.

●Costco reported its comparable store sales rose 5% in May just missing analysts’ expectations for a 5.5% rise. Total revenue was up 7% to $8.13 billion.

Excluding changes in gas prices and foreign currency exchange rates, Costco’s comp sales rose 6%. In the United States, comp sales were up 6% while internationally they were up 7%.

For the year-to-date, the company reported comp sales rose 6%.

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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