Although May same-store sales came in better than some observers expected, Morgan Keegan analyst Brad A. Stephens said June was shaping up as a tough month for retailers.
As a result, Stephens is favoring apparel suppliers with "limited department store exposure," such as Phillips-Van Heusen Corp. and Warnaco Group Inc., as well as more powerful brands such as Calvin Klein and Polo Ralph Lauren.
In a research note Friday, Stephens said talks with apparel buyers last week "lead us to continue to be cautious on apparel names. Retailers are demanding higher give-back, higher advertising co-op and are forcing the apparel companies to hold goods longer. This is the most aggressive posture we can ever remember buyers taking with their apparel counterparts."
The analyst said May Department Stores Co.'s same-store sales "results were the second-weakest month in over a year. Further, four out of our eight monitored department stores posted negative comps. With May comps experiencing a positive calendar shift, the June consensus outlook is rather bleak with three out of the four companies [Kohl's Corp., Nordstrom Inc. and Saks Inc.] that posted positive comps in May expecting June's results to run significantly weaker/negative."
Stephens said for apparel stocks to go substantially higher, "department stores need to deliver comp/earnings per share upside. Therefore, we expect muted apparel company returns over the next few weeks/month as June is expected to be soft."
Thomas A. Filandro, analyst at Susquehanna Financial Group, said in a research note that consumers were facing headwinds, "including higher gas prices, an uncertain housing market and mixed overall confidence," which were weighing down shoppers' "enthusiasm to spend."
The analyst said consumers were "clearly focused on sale merchandise, which will likely accelerate during the remainder of the commodity summer selling period."
As tracked by WWD, same-store sales in the department store sector rose on average 5.3 percent for May. Mass merchants had a 4.1 percent average comps gain and specialty stores posted a 0.5 percent average increase.
Results were in line with analysts' expectations of strength in the luxury channel and softness at moderate and low-priced retailers.In apparel, dresses, knit tops and shorts were important items for May, and analysts expect these segments to be key in the early back-to-school season.
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)
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