Higher fuel costs, a soft housing market and stagnant wage growth could result in bleak May same-store sales, analysts said Monday. The figures will be released Thursday.
With favorable weather and no major holiday shifts to distort results, "May is the first month this year that will provide a true read" on the state of the American consumer, Eric Beder, specialty retail analyst at Brean Murray, Carret & Co., wrote in a report.
Pent-up demand for apparel, summer-like temperatures and a boost from Memorial Day will drive any uptick in sales, analysts said. The Goldman Sachs Retail Same-store Sales Index forecasts a 0.1 percent decline for May, which compares with a 0.2 percent dip in the March and April period, and a 3 percent gain in May 2006.
Still, there will be winners, such as Saks Inc. and Nordstrom Inc., which serve the high-end spender. And a select crop of trend-right specialty retailers will deliver sales results well above those of peers. Overall, though, comps are expected to be mixed and down.
"May comps have been difficult to read in light of ongoing softness cited at Limited Brands and Chico's FAS, [and] cautiously optimistic comments from American Eagle Outfitters," Margaret Mager, specialty analyst at Goldman Sachs, wrote in a research note. Mager said results would likely be offset by "positive comments or guidance on May trends during first-quarter conference calls from TJX Cos., Polo Ralph Lauren, Phillips-Van Heusen and Coach."
Mall traffic trends continue to be negative, down an estimated 7 percent for the first three weeks of the month, according to a report by Soleil Group.
In the specialty sector, analysts at Morgan Keegan & Co. expect teen retailers to be up 2 percent for May and women's apparel to be down 2 percent.
Zumiez Inc. and American Eagle Outfitters Inc. are expected to be the top two teen performers, driven by a compelling summer mix and trend-right merchandise. Aéropostale Inc. also is expected to be in positive territory, up against easy comparisons. Abercrombie & Fitch Co. continues to suffer from a lack of bottoms, and analysts at J.P. Morgan forecast that sales in stores open at least a year would be down 4 percent to 6 percent.Pacific Sunwear of California Inc. could post positive comps of 2 percent to 4 percent, but the company's demo unit still is a drag on overall same-store sales, analysts said.
Limited Brands Inc. lowered its monthly comp guidance on May 23 to a low-single-digit decline from a low-single-digit increase, and Gap Inc. is expected to be down 2 percent to 4 percent, according to J.P. Morgan analysts.
Lazard Capital Markets analyst Todd Slater said in a research note Monday that mixed results in May "will not likely boost retail stocks. While May comps will show a nice improvement from April, the numbers are likely to be quite mixed, mall traffic remained sluggish, revenues benefited from the Memorial Day shift (at the expense of June) and promotional cadence accelerated. We do not think anemic May results will buoy sentiment in the retail group."
Slater has the luxury retailers pegged to outperform other channels with an 8.6 percent comps gain. "We expect Saks to report a 15 percent comp, continuing a monthly trend of industry-leading productivity growth," Slater said.
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews
@prada is introducing a new project at its men’s fall 2018 show this Sunday: “Prada Invites.” The fashion house invited four celebrated creative minds – @ronanaerwanbouroullec, Konstantin Grcic, @herzogdemeuron and @rem.koolhaas – to each create a unique item with its iconic nylon material. The designs will be unveiled on the runway show, which will take place at the company’s warehouse in Viale Ortles 25. #wwdfashion #mfwm (📷: @martinocarrera)
@kering_official is spinning off its stake in puma in an effort to focus on its luxury brands, the brand operator announced yesterday. “We are proud to have supported the turnaround of Puma, which now has unrivaled capabilities to take full advantage of the specific dynamics of its global markets and is poised to achieve substantial growth,” said François-Henri Pinault, Kering’s chief executive officer and chairman. Artémis will become a “long-term strategic shareholder” of Puma with a 29 percent stake. #wwdnews #wwdfashion (📷: @jilliansollazzo)
The fashion world mourns for celebrated street style photographer, Nabile Quenum, who died at age 32 in Paris.
Quenum, creator of the fashion blog “J’ai Perdu Ma Veste,” was a fashion week fixture, and regularly shot for New York magazine’s The Cut, among other outlets, and brands such as Louis Vuitton, Moncler and Adidas. He was also actively involved in the #NoFreePhotos initiative, which kicked off in the fall. Read more about Quenum in @kbsmoke's story on WWD.com. #wwdnews
@verwanggang and @maisonladuree have teamed up on a dessert collab called Vera Wang Pour Ladurée. The collection, which launched this week, features a specialty macaroon, as well as a wedding cake inspired by one of the designer’s gowns. “I could not imagine a more delicate or sophisticated creation to grace any couple’s celebration,” said Wang. #wwdfashion