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Retail Swoons in June: Comp Sales Slow Down

Same-store sales for June suffered from tough comparisons, cool summer weather, higher energy prices and less than stellar Father’s Day sales.

According to Kohl's, "Women's was the most difficult area, with a mid-single-digit comparable-sales decline for the month"

NEW YORK — The joys of spring and early summer were tempered in June as retailers were forced to confront tough comparisons, cool summer weather, higher energy prices and less than stellar Father’s Day sales.

This story first appeared in the July 9, 2004 issue of WWD.  Subscribe Today.

Comparable-store sales for the month suffered from what Bear Stearns analyst Dana Telsey described in a June 29 research report as “the woes of June.”

Of the 50 companies tracked by WWD, 21 recorded a decline in June comps, compared with 13 in May. Comparable-store sales is the year-over-year percent change in monthly sales at stores open for at least one year.

The Goldman Sachs Retail Composite Index posted a gain of 2.5 percent for the month, falling short of the firm’s estimate of 3.2 percent and losing considerable ground from the 5.5 percent gain reported in May.

High-end department stores, buoyed by affluent customers with impervious spending powers, continued to lead the march. Saks Fifth Avenue posted an 18.3 percent gain, followed by Neiman Marcus at 13 percent.

Accessories reigned, with handbags cited as one of the strongest-performing merchandising categories at Nordstrom, Saks Fifth Avenue and Neiman Marcus.

Even for Kohl’s, whose comparable-store sales declined, accessories was the highest achieving area.

“Women’s was the most difficult area, with a mid-single-digit comparable-sales decline for the month,” Kohl’s reported in a conference call to investors. “Although pleased with our overall selling of seasonal apparel for the quarter, we were disappointed in our June results after the strong selling in May.”

In his preview of June comps, Richard Hastings, a retail analyst for Bernard Sands, warned that Kohl’s may be facing greater challenges. “Fashion, whether for home or personal, is being pulled toward specialized visual presentations and unique brands in specialty stores, and by stronger vendor brands in department stores,” said Hastings. “The moderate market may be Kohl’s strength, but that market’s strength is being tested by a wide range of retailer formats.”

Other major department stores, though, cashed in with women’s clothing. Nordstrom’s strong performers included women’s designer apparel and junior women’s apparel, while Saks scored with designer and “gold range” apparel. Neiman Marcus credited couture and contemporary apparel with strong sales.

According to Telsey, June is an especially important month for specialty retailers, accounting for approximately 40 percent of second-quarter sales.

Good news for Aeropostale, whose chart-topping 21.3 percent comp gain was fueled by sell-through of summer merchandise and a strong response to back-to-school offerings.

Ann Taylor also bucked the trend, with the Loft division posting its eleventh consecutive month of double-digit comp gains. Full-price selling at Loft and sales of tops at Ann Taylor stores pushed the company to an 11.9 percent gain for the month.

The accessories craze hasn’t been isolated to the department store channel. “Jewelry continues to be a great seller across the board, with interest as strong as it has been all year,” said Marla Schaefer, co-chief executive officer at Claire’s Stores. Flip-flops, sunglasses and temporary tattoos were also hot sellers, according to Schaefer.

Mass merchants Target and Wal-Mart proved that their decisions to lower sales outlooks last week were correct, as their comps increased only weakly, by 2.3 and 2.2 percent, respectively. Both stores acknowledged their disappointment.

“Sales for Target Corp. were well below plan for the month of June,” Bob Ulrich, chairman and ceo of Target Corp., said in a release.

“As we discussed last month, sales at the end of the period were negatively impacted by unseasonably cool weather as compared to the best weeks of the summer last year,” Wal-Mart said in a conference call to investors.

For Target and Wal-Mart, expectations for July continue to be lower than usual.

“Higher gasoline prices also continue to impact our customers,” Wal-Mart told investors. “Therefore, for the July four-week period, we forecast comparative sales for the U.S. to be up in the 2 to 4 percent range.”

However, according to Hastings, mass retailers would be better served focusing on their product assortments, rather than fretting over how macroeconomic events will affect their customers’ pocket books.

“Despite some worries that consumers are cutting back and will look twice at price tags, there is even more to worry about when merchants make fashion errors,” said Hastings. “The slightest sense by shoppers of weak fashion, poor styling, and inconsistent product details results in instant migrations to other retailers for certain products, especially fashion and beauty. This issue will remain front-and-center for Wal-Mart, Target and Kohl’s for the foreseeable future.”

JUNE SAME-STORE SALES
June 2004
% Change
May 2004
% Change
April 2004
% Change
March 2004
% Change
DEPARTMENT STORES
Bon-Ton
(3.8)
2.6
(4.2)
(1.7)
Dillard’s
(1)
(5)
1
3
Federated
3.4
2.9
5.4
6.8
Gottschalks
3.3
(7.6)
(0.8)
11.2
Kohl’s
(3.7)
5
(4.6)
(0.9)
May Co.
1.9
(3.8)
(8.1)
10.1
Mervyn’s
0.2
(6.5)
(6.6)
0.8
Neiman Marcus
13
8.5
14
25.7
Nordstrom
5.7
9.4
10
15.9
J.C. Penney (dept. stores)
4.8
9.1
5.3
11.4
Saks Dept. Store Group
2
3.1
10.6
1.9
Saks Fifth Ave. Enterprises
18.3
19.4
4.3
20.6
Sears Roebuck (U.S. stores)
(3.1)
(3.7)
(1.8)
0.1
Stage Stores
(2.5)
1
0.3
5.5
Average:
2.8
2.5
1.8
7.9
SPECIALTY CHAINS
Abercrombie & Fitch
(5)
1
0
(1)
Aeropostale
21.3
27
19.3
14.2
American Eagle (U.S. stores)
8.7
11.4
8.3
7.6
Ann Taylor
11.9
9.9
9.6
12
Banana Republic
11
8
12
25
Bebe
6.7
10.2
10
20.5
Buckle
10.3
8.3
8.6
14.2
Cache
(4)
4
8
12
Cato
(5)
4
(2)
(1)
Charming Shoppes
(2)
5
4
4
Chico’s FAS
10.9
17.9
16
18.9
Christopher & Banks
(8)
(6)
(3)
(7)
Claire’s
11
10
9
10
Deb Shops
(4.5)
(2.3)
1.4
(5.2)
Dress Barn
(1)
4
6
9
Gap (U.S. stores)
(2)
11
3
5
Goody’s Family Clothing
(3.2)
1.3
1.8
0.3
Guess
12.7
14.6
17.5
13.8
Hot Topic
(0.4)
(0.5)
0.7
3.9
Limited Brands
19
3
2
15
Mothers Work
(10.9)
(3)
(0.4)
(6.3)
Old Navy
(2)
4
3
11
Pacific Sunwear
7
7.8
11.4
12.4
Rite Aid
2.4
4.8
5.4
5.9
Talbots
0.9
8.1
0.3
1.1
United Retail
(5)
(1)
(3)
(4)
Walgreen
10.6
8.5
10.3
12.6
Wet Seal
(10.1)
(7.8)
(16.8)
(21.1)
Wilsons
19.2
(6.4)
(3.5)
(2.6)
Average:
3.5
5.4
4.8
6.2
MASS MERCHANTS
Retail Ventures
(4.4)
1.9
(0.2)
4.1
Ross Stores
(4)
(1)
2
7
ShopKo
2.2
3.2
4.3
5.2
Stein Mart
12.5
11.1
6.7
18.4
Target (discount stores)
2.2
5.8
6.2
7.8
TJX
2
5
5
9
Wal-Mart (discount stores)
1.3
4.7
3.6
5.6
Average:
1.7
4.4
3.9
8.2
Tally:
Up
29
37
36
40
Flat
0
0
1
0
Down
21
13
13
10
Total
50
50
50
50
SOURCE: COMPANY REPORTS; PARENTHESES INDICATE DECLINES