June is expected to be a lackluster month for retailers as consumers face higher, year-over-year gas prices, and mall traffic remains sluggish, said analysts releasing same-store sales previews Monday.
This story first appeared in the July 10, 2007 issue of WWD. Subscribe Today.
Shoppers were still spending, but their purchases were focused on the sales rack, Thomas Filandro, specialty analyst at Susquehanna Financial Group, said in a research note.
“June is a true test of [a retail company’s] competence in minimizing inventory risk and capitalizing on margin opportunities,” Eric Beder, specialty retail analyst at Brean Murray Carret & Co., said in a research note.
In the specialty segment, analysts expect the junior divisions at retail chains and a weak performance by West Coast stores to drag down total comps.
“Although June represents about 38 percent of second-quarter sales for teen retailers, profit contribution is substantially less as June sales are largely clearance-driven,” Brad Stephens, retail analyst at Morgan Keegan & Co., said in a research note. “We view July comps, which include new merchandise and initial back-to-school floor sets, as a more accurate barometer of retail momentum.”
Goldman Sachs analyst Adrianne Shapira said she expected June sales “to at best meet expectations.” Shapira cited gas prices as a negative in the sales equation. The analyst said fuel prices were up 8 percent on a year-over-year basis, and up 37 percent since the beginning of the year. Still, there will be winners in June.
American Eagle Outfitters is expected to be one of the few teen retailers to post positive comps, in the range of 3 to 5 percent. “American Eagle Outfitters entered the June selling period with a slight benefit in terms of its promotional cadence, which shifted into June from May last year,” Filandro said.
Mall-based retailer Zumiez should also shine, up against easier year-over-year comparisons and a solid merchandise mix, Dorothy Lakner, retail analyst at CIBC World Markets, said in a note. She forecast a same-store sales gain for the retailer of around 9 percent.
With a continued weakness in denim and bottoms, Abercrombie & Fitch would remain soft, analysts predicted. Same-store sales were expected to be down 6 to 8 percent, according to analysts.