July Retail Comp Sales Give Surprising Results

In Reports, What's New, Industry News by Accessories Staff

Do July comparable store sales indicate good things for the back to school season?

New York—Credit the stifling temperatures in many parts of the nation that sent consumers indoors seeking refuge in the cool of retail stores, an increase in clearance sales or even early back to school bargain hunters, whatever the reason cited by economists, July beat comparable store sales estimates.

Normally one of the slowest months at retail, July turned out to be a better month than expected. Even with gloomy economic news, consumers continued what one economist called “recessionary spending.”

According to Thomas Reuters survey of leading retailers (excluding drugstores), comparable store sales rose 4.6% in July, beating a 3.1% increase that economists had expected.

“The consumer has decided to shake off the bad news and is stocking up for back to school,” said Madison Riley, managing director at Kurt Salmon. “All retailers are looking at the second half with caution, so you want to bring in freshness as soon as you can.”

That’s especially important as August marks the beginning of retailers’ second most important shopping season, back to school, which can account for 10% of total sales.

Clearances, Sales Promotions Boost Figures?

The International Council of Shopping Centers (ICSC)’s preliminary tally of 20 retailers also found better-than-expected July comparable store sales: a 4.6% increase, higher than the 3% to 3.5% increase the ICSC expected. Moreover, ShopperTrak estimates retail traffic rose 7.4% in July.

“Hot weather and summer clearance, coupled with some newness in stores in the back half of the month, is leading to a nice upside heading into back to school,” said Ken Perkins, president of Retail Metrics, a research firm. “Retailers were pretty aggressive with promotions, trying to clear out merchandise.”

“The weather drew people out, and they were enticed by the discounts, but I would not put too much stock in what happens in July,” said Brian Sozzi, retail analyst at research firm NBG Productions. “Consumers are only responding to deep discounts or heavily promoted items.”

Many retailers reported comparable store sales better than previously expected, including Macy’s Inc., Kohl’s, Nordstrom, Target, Stage Stores, Stein Mart and TJX. Sailing way past expectations were Gap Inc., Limited Brands and Ross Stores. Misses included Saks Inc., Cato, Wet Seal and Zumiez.

Given that July is a transition into back to school and fall, economists believe retailers can have a successful back to school business if they capitalize on what consumers really are looking for.

“The month’s results matter because they represent the latest read on consumer spending patterns ahead of the very important back-to-school selling period,” said Charles Grom, retail analyst at Deutsche Bank.

Reports by Retailer

Although these figures sound very promising, it’s important to keep in mind that only about 13% of major retailers still report monthly sales figures. Many majors, including Walmart, JCPenney, Dillard’s, and Sears, no longer release monthly sales.

Here are some of the retailers reporting their July sales, and in some cases, their second quarter sales totals:

●Macy’s Inc. reported that its July comparable store sales rose 4.1% ahead of analysts’ estimates for a 3.2% increase. Total sales in July rose 5.1% to $1.69 billion.

Macy’s Inc. includes online sales in its comp figures and online business was brisk, up 35.1% at macys.com and bloomingdales.com combined and accounting for about half of the total comp store sales increase.

For its second quarter, total sales rose 3% to $6.12 billion. Comparable store sales were also up 3%.

●Kohl’s posted a 1.7% increase in its July comparable store sales—that better than the flat comp estimates from analysts’ consensus. Total sales rose 3.4% to $1.16 billion.

Best performing categories included all footwear, men’s and home divisions which all posted mid-single-digit comparable revenue increases. The Midwest, Mid-Atlantic and Northeast were the strongest regions.

For its second quarter, comparable store sales were down 2.7% and total sales dropped 1% to $4.21 billion.

●Nordstrom Inc. reported its July comparable store sales rose 0.9% beating analysts average estimate for a 2.7% drop. Total sales rose 1.1% to $1 billion.

Comp sales were particularly strong at its Nordstrom Rack stores which were up 9.7% while full-line Nordstrom stores had a 1.3% increase.

In the four weeks that ended July 28, revenue at Nordstrom Rack stores open at least a year rose 9.7%, while revenue at higher-end Nordstrom stores rose 1.3%.

For its second quarter, Nordstrom said total sales climbed 7% to $2.92 billion with comparable store increase up 4.5%.

Nordstrom noted that its July and second quarter sales figures reflected a shift of its Anniversary Sale event, historically the company’s largest, to one week later in July compared with last year, moving some of the events sales into its third quarter.

●Saks Inc. had a 3.5% increase in its July comparable store sales, just missing analysts’ estimate for a 4% increase. Total or owned sales were up 5.1% to $200.7 million.

Best performing categories included women’s contemporary and designer apparel; footwear; fashion and fine jewelry; handbags; and cosmetics and fragrances; men’s accessories; and contemporary apparel.

Store management said the addition of a one-day Electronic Gift Card (or EGC event) to its promotional calendar positively effected July comp sales by around 200 basis points.

For its second quarter, owned sales were up 4.9% to $690.6 million. compared to $658.1 million with a 4.7% increase in comparable store sales.

●Bon-Ton Stores reported its July comparable store sales were flat compared to a year ago. Total sales fell 0.1% to $173.4 million.

Brendan Hoffman, president and chief executive officer of Bon-Ton, said management is pleased with the company’s July sales performance.

“Our semi-annual home and furniture sales event posted a strong increase largely due to the successful introduction of new fall goods,” said Brendan Hoffman, president/ceo. “We were particularly pleased with customer response to our new wear-now offerings in ladies’ apparel, shoes and accessories.”

Hoffman also said that the retailer’s customers had responded positively to a clearer message of value in its revamped promotional marketing. “Our inventory has transitioned such that we are well-positioned to capitalize on the early sell-through of fall merchandise as we head into the second half of the year,” Hoffman added.

For the second quarter, Bon-Ton posted a 0.1% decrease in total sales to $549.9 million with comp store sales up 0.1%.

●Stage Stores Inc. reported a 5.3% increase in its July comparable store sales helped by better performances in an array of categories including accessories. Total sales were up 7.9% to $110 million.

Best performing categories that helped boost the total comp sales figure included accessories, cosmetics, home & gifts, misses sportswear and young men’s, all exceeding the company average. Geographically, the Northeast, Mid Atlantic, South Central and Southwest regions all outperformed.

“Clearly our merchandise offerings are resonating well with our customers and our performance continues to benefit from an increased average transaction,” said Michael Glazer, president/ceo. “Looking ahead, we feel good about our merchandise assortments, our marketing plans and our store execution as we enter the back-to-school shopping period.”

For its second quarter results, the company’s total sales rose 8.3% to $353 million with comparable store sales up 5.4%. 

●Target reported its July comparable store sales rose 3.1% ahead of analysts’ predictions for 2.7% growth. Total sales rose 3.2% to $5 billion.

Noting that the comp store increase was “right in line with our expectation,” Gregg Steinhafel, Target’s chairman/ceo, “Guests continue to respond to our innovative merchandising, remodel program and 5% REDcard Rewards, driving healthy increases in traffic and sales in a consumer environment that remains quite challenging.”

The mass merchants’ strongest category was food, posting a “low double-digit” comparable sales increase, while health and beauty recorded “mid single-digit” comp sales. Meanwhile, comp sales in both home and hardline products fell by mid single-digits, Target said.

For its second quarter revenue, total sales increased 3.5% to $16.45 billion, just short of analysts’ estimate for $16.81 billion. Comparable store sales rose 3.1%.

Target said it expects its August comparable store sales to increase in the “low-to-mid single-digits.”

●Gap Inc. reports its stores July comparable store sales total rose 10%, far ahead of analysts’ average estimate for a 3.8% gain—and helping to boost the company’s second quarter earnings. Total sales rose 12% to $1.06 billion.

Glenn Murphy, chairman/ceo, said the company was pleased with sales “and the continued positive trend we’re experiencing inNorth America.”

By division, The Gap North America posted a 13% comp sales increase, a reversal from July 2011’s decline. Banana Republic posted 8% comp sales growth compared with a 4% decrease last year, and Old Navy had 12% increase compared with a 3% decline a year ago.

For the second quarter, Gap Inc.’s total sales increased 6% to $3.58 billion, beating analysts’ prediction of $3.51 billion. Comparables store sales were up 4%

●Limited Brands once again surpassed analysts’ estimates in its July comparable store sales. They were up 12%, nearly double the 6.2% increase analysts expected. Total sales were $649.8 million compared to $660.4 million in July 2011 when the sales included $67.7 million from the sale of Limited Brand’s apparel-sourcing business.

By division, Victoria’s Secret reported a 12% rise in comparable store sales, again beating analysts’ estimate for a 7% gain. Bath & Body Works saw a 17% comp sales increase, more than double a 6.9% increase analysts expected.

Only its La Senza stores lagged: comp sales fell 5%.

●Cato Corp. said the sluggish economic situation helped push down its July comparable store sales down 2%. Total sales rose 1% to $63.4 million.

“July same-store sales reflect the continuing economic uncertainty and the related volatility we have seen throughout much of the year,” said John Cato, chairman/president/ceo.

For its second quarter, total sales fell 1% to $231.5 million with comparable store sales down 4%.

●Buckle Inc. saw its July comparable store sales edge down 0.1%, but less than the 1.2% decline that analysts’ opinion expected. Total sales were up 2.4% to $66.2 million.

For its second quarter, total sales increased 1.5% to $215.5 million with comparable store sales down 0.8%.

●Wet Seal Inc., which has been struggling to regain its momentum, reported a July comp sales drop of 15.6%. That was worse than the 14% drop analysts’ had expected. Total sales fell 12.9% to $40.4 million, with its Wet Seal division posting a 13.3% tumble to $34.3 million and Arden B. sales dropped 10.8% to $6.1 million.

Comp sales at Wet Seal fell 15.9% and 14.1% at Arden B.

Hal Kahn, chairman of Wet Seal’s board who is temporarily heading merchandising after CEO Susan McGalla was fired last month, said: “The second quarter ended with weak July sales results. We believe the company’s performance in recent quarters is due in part to a move away from some of our fast fashion merchandising practices at Wet Seal that had been successful in the past. Price points were elevated in many product categories, and we believe the company ceded a key part of its customer base.”

For its second quarter, Wet Seal Inc.’s total sales fell 9.1% to $135.3 million while comparable store sales were down 9.1%.

“We believe these initiatives will result in improved sales performance and enable us to, again, attract a broader customer demographic to Wet Seal, including the younger teen, which we may have lost during the past year,” Kahn said.

●Zumiez reported a rare miss in its July comparable store sales, which grew 7.5%. Analysts’ average estimated the teen retailer would have an 8.5% increase. Total sales rose 21% to $47 million.

●Ross Stores gave an impressive showing in its July sales figures: comparable store sales were up 7%, topping analysts’ estimates for 4.5% growth. Total sales were up 12% to $709 million.

“We are pleased with our robust sales gains for both July and the second quarter,” said Michael Balmuth, vice chairman/ceo. “These better-than-expected results demonstrate that our ability to provide a wide array of terrific name brand bargains continues to resonate with today’s value-focused shoppers, driving broad-based merchandise and geographic trends.”

For its second quarter, Ross said total sales rose 12% to $2.34 billion, above analysts’ forecast for $2.32 billion. Comparable store sales were up 7%.

Balmuth added that based upon the “above-plan sales and gross margin in July,” the company raised its second quarter earnings forecast.

●Stein Mart beat expectations for its July comparable store sales, which were up 2.8%. Analysts’ average estimate expected a 2.5% increase. Total sales increased 4% to $69.9 million from $67.2 million.

Home, women’s accessories and career sportswear posted the strongest sales for July. Dresses, women’s plus size sportswear and ladies’ boutique were weaker. Geographically, the Northeast, the Midwest andFloridawere the strongest whileCaliforniawas slightly weaker.

“Our increases in comparable store sales for July and the second quarter reflect improvements in our merchandise and promotional approach,” said Jay Stein, interim ceo. “We are encouraged by these sales gains which are an indication that our merchandising strategy is the right one for us.”

Stein Mart also reported that its second quarter total revenue increased more than 2% to $276.4 with comparable store sales up 1.6%.

●TJX Cos., parent of Marshall and T.J. Maxx, posted a 7% comparable store sales gain in July, better than the 5% increase analysts had expected. Total sales were up 8% to $1.8 billion.

As a result, the company raised its second quarter and full year earnings estimates thanks to the better-than-expected July numbers.

“We enter the third quarter in a very strong position, posed to capitalize on our many opportunities for the second half of 2012,” said Chief Executive Carol Meyrowitz. “Our inventories are in great shape, allowing us to consistently flow to our stores an exciting mix of fresh back-to-school merchandise.”

For the second quarter, the company now expects earnings of 55 cents a share, above its prior guidance for 52 cents to 53 cents.

●Costco Wholesale Corp posted a 5% increase in its July comparable store sales. Total sales were up 8% to net sales of $7.25 billion.

Excluding the effects of gasoline and foreign currency exchange, Costco’s July comp sales were up 7%. The company said lower fuel prices and a strong dollar had a negative impact on its results.

Analysts had expected Costco’s July sales to increase 4%, including the impact of fuel.


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