Hot weather in June drove consumers into stores where they picked up summer apparel they didn't buy during spring's extended bout of unseasonably cold, wet weather, analysts said. As a result, same-store sales in June are largely expected to show a rebound across the retail apparel sector, compared with the generally sagging results in March through May. Most retailers report June sales next Thursday.
"Now that summer has arrived, we believe that the consumer has too," said Bill Dreher, analyst at Deutsche Bank, in a June 28 research report. Dreher cited warm weather, pent-up demand, a good fashion cycle and high consumer confidence for his positive outlook during a subsequent conference call previewing June same-store sales. The Conference Board said on Tuesday that consumer confidence rose to a three-year high of 105.8 in June, versus a reading of 103.1 in May, and 97.5 in April.
"June sales are going to be great," Dreher said of the department and discount stores on his radar. "Every retail sales result in our broadlines industry is going to be positive."
Dreher expects Kohl's to be a top performer with a roughly 15 percent same-store sales increase. That would compare to a 0.2 percent increase in May, and 3.7 percent decline in June 2004 comps.
"June [will be] Kohl's first good comp in two years," predicted Dreher. The company has been in the midst of perfecting an operational turnaround for over the last year.
Within the specialty retail group, Deutsche's Gabrielle Kivitz believes June comps will be "pretty notable," especially among companies that are generally sensitive to mall traffic such as Aeropostale Inc. and Pacific Sunwear of California Inc. Kivitz is expecting her June comps index to show the strongest reading since October 2004.
On Thursday, specialty retailer Christopher & Banks Corp. released its same-store sales report for June, which showed an 8 percent gain. June's results followed a 7 percent May comps increase, and a 3 percent rise in April. Total sales, the Minneapolis-based company said, rose 21 percent to $36.1 million in the four-week period ended June 25.
In the specialty retail sector, June sales were likely propelled by clearance events, however, as retailers look to clear stores to make room for back-to-school merchandise, Kivitz stressed. "The main concern for retailers is to be in a clean inventory position for back-to-school," she said.Kivitz is expecting Abercrombie & Fitch Co. to have a 28 to 30 percent increase in June comps and Aeropostale to report a 5 to 7 percent increase. At Chico's FAS, Kivitz is expecting a 10 to 12 percent June comp gain, while Gap Inc. comps should be flat to up 2 percent and PacSun should come in with a 5 to 7 percent increase.
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