NEW YORK — Stagnating sales trends coupled with light inventory to clear made July’s comparable-store sales results a washout. Luxury retailers, of course, remained immune.
“Most women’s retailers were weak, but July is clearance and there was not much out there,” said Joseph Teklits, a retail analyst with Wachovia Capital Markets, in a note following results.
Despite the slowdown, the balance between gainers and losers among the 50 retailers tracked by WWD remained relatively even. The number of retailers reporting positive comps slid to 26 compared with 29 in May. The number of retailers reporting negative comps came in at 23, compared with 21 in June, while one retailer was flat.
The Goldman Sachs Retail Composite Index returned a gain of 2.6 percent, narrowly beating the firm’s estimate of a 2.5 percent increase. However, the Index was well off the 4 percent gain reported during July 2003.
On Wall Street, investors ignored same-store sales results, and fretted over rising oil prices instead. The Dow Jones Industrial Average closed Thursday down 163.5 points, or 1.6 percent, to 9, 963 while the S&P Retail Index fell 9.7 points, or 2.6 percent, to 366.4.
Given tighter inventory controls and concerns over rising energy prices, retailers and analysts hadn’t expected to be able to break free from the downward sales trend that began in late June.
“We would emphasize that July is a relatively small dollar volume month and is largely driven by clearance activity, as retailers prepare for the back-to-school season,” said Lehman Brothers retail analyst Robert Drbul, in his preview of department store comps. “While we are encouraged by the healthy consumer confidence numbers reported the last two months, we believe high gas prices remain a concern for consumers.”
With back-to-school offerings already hitting shelves and fall easily visible on the horizon, retailers are expecting a rebound in August.
Richard Hastings, a retail analyst with Bernard Sands, paints a more dire picture. “Anybody can see from looking at the explosive and unsustainable growth in home equity loans that households are reaching well beyond their spending capabilities,” wrote Hastings in a note following Tuesday’s release of government data showing declining consumer spending in June.But the spending power of affluent consumers has yet to wane, driving comps at high-end department stores. Neiman Marcus paced the group with a 16.6 percent comp gain. Nordstrom credited much of its 6.1 percent increase to strong sales in junior’s and specialty-sized apparel. Accessories and women’s and children’s shoes also excelled. The only category not posting positive results was women’s activewear.
“July is the most significant month of the quarter for Nordstrom’s due to our anniversary sales,” said Stephanie Allen of investor relations during a pre-recorded call. “The event went very well this year. We are continuing to see stronger customer response to color, newness and price points.”
The specialty and mass channels saw business start to pick up in the latter half of the month as well. “Overall, the last two weeks of July seemed to materially improve from the slow first half of the month [which was a continuation of June] — a good indicator for back-to-school,” wrote Wachovia’s Teklits in his preview of July comps.
American Eagle and Aeropostale credited the b-t-s season for their double-digit comp gains.
“We’ve had a terrific response to our new back-to-school assortment, which arrived in stores during the second week of the month,” said Laura Weil, Eagle’s chief financial officer, in a recorded statement. Women’s apparel comped in the mid-20s during the second week of the month and into the low-30s in the third.
Mass merchants also have begun to reap the benefits of the b-t-s season. Wal-Mart’s 2.4 percent gain was driven in large part by apparel. “Initial demand for back-to-school included strength in bedding, basic apparel, uniforms and new fall fashions, including skirts, polo shirts and screened Ts,” the company said in a sales call. “Less clearance merchandise in the period resulted in lower sales and markdowns in apparel and seasonal categories.”
The lack of clearance inventory and transition to b-t-s has gone less smoothly for Gap and Abercrombie. All three of the Gap’s concepts comped down for the month, with Gap U.S. falling 3 percent, Old Navy falling 2 percent and Banana Republic plunging 10 percent.“The difficult sales trend is in part due to our stores having a less promotional look than in prior years,” said Susan Riley, Abercrombie’s chief financial officer, in a recorded message. According to Riley, strong sales in women’s jeans, sweats and fleece, was offset by declines in knit tops, graphic Ts and pants.
— With contributions from Carrie Melago
JULY SAME-STORE SALES
July 2004 % Change
June 2004 % Change
May 2004 % Change
April 2004 % Change
J.C. Penney (dept. stores)
Saks Dept. Store Group
Saks Fifth Ave. Enterprises
Sears Roebuck (U.S. stores)
Abercrombie & Fitch
American Eagle (U.S. stores)
Christopher & Banks
Gap (U.S. stores)
Goody's Family Clothing
Target (discount stores)
Wal-Mart (discount stores)
SOURCE: COMPANY REPORTS PARENTHESES INDICATE DECLINES
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews
“Stranger Things” is getting a new cast member for season 2. Meet @sadiesink_, the 15-year-old who will be joining the Netflix series for its new season. You may recognize her from “The Glass Castle” with Brie Larson and Woody Harrelson, but the Texas native’s next role goes in an entirely different direction. She describes her character, Max, as “a rough and tumble skater girl [who] becomes friends with the boys at school.” The second season debuts on October 27. (📷: @jgreenery) #wwdeye
Amid the Harvey Weinstein controversy, there’s another sector that’s being put under the spotlight for sexual abuse: the modeling industry. While rumors about abuse and sexual harassment of female and male models — and the photographers, agents and others who perpetrated it — have circulated within the fashion world for years, model @cameronrussell started posting stories from models on Instagram last week about abusive situations they’ve encountered — from sexual harassment and molestation to attempted rape. Over 75 have weighed in so far. Read more on WWD.com. Link in bio. #wwdnews
To celebrate its 16th anniversary, @dylanscandybar tapped designers and celebrities to create mosaics out of candy. The mosaics will be auctioned off to support the philanthropic cause of each participant’s choice. Pictured here is the mural created by @aliceandolivia's Stacey Bendet. For a first look at some of the other artwork being unveiled tonight, go to WWD.com. #wwdeye
The annual Veuve Clicquot Polo Classic in Pacific Palisades this weekend drew Kate Hudson, Tracee Ellis Ross, Laura Dern and more. See pictures of the star-studded event on WWD.com. (📷: @chelsealaurenla) #wwdeye
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye