The small group of stores checking in with comparable sales reports for June on Thursday is likely to provide little in the way of a spark as the remainder of the retail community prepares to close the books later this month on a tough second quarter.
As has been the case since about this time last year, retailers have battled for traffic and sales in their stores and online and for signs that there are particular pieces of seasonal apparel they’re eager to place in their closets.
Thomson Reuters’ most recent assessment of the numbers to come later this week, issued on Tuesday, translates into a 0.7 percent median gain among comp reporters. While a few standouts are expected — a 3.4 percent gain at L Brands Inc. and a 4 percent lift at Stein Mart Inc. — Gap Inc. is expected to report a 0.5 decline for the month, with a gain of 2.6 percent at Old Navy and declines of 3.8 percent at Gap and 1.1 percent at Banana Republic.
Both teen retailers in the Thomson sample are expected to report declines, with The Buckle Inc. down 1 percent and Zumiez Inc. off 4 percent.
All revisions to the Thomson numbers since last week, including the headline 0.7 percent increase, were reductions.
Retail Metrics expects a 0.6 percent decline in June comps, in part a reflection of the 5.5 percent median gain reported by stores in June 2014. The company’s store checks found both mall and off-mall traffic “noticeably slower than in May,” with the exception of a “modest uptick” leading up to Father’s Day, and much of the holiday increase attributable to strength in the home sector and a few big-box stores. Costco Wholesale Corp. is expected to be down slightly, although U.S. stores, eliminating the effects of the strong dollar and cheaper gasoline, are seen rising 5.3 percent.
“Monthly same-store sales have run historically soft over the past four months, topping 1 percent in February but up just 0.4 percent and 0.6 percent in March and May while running negative in April,” said Ken Perkins, president of Retail Metrics.
Perkins believes that the woes of the comp reporters are shared by the broader retail community. “Second-quarter retail same-store sales are currently forecasted to show a significant sequential decline from the 3 percent and 2.3 percent gains racked up” in the final quarter of 2014 and first quarter of 2015, respectively.
He added that second-quarter comps in the teen sector are expected to be flat “and have been negative in every quarter since the fourth quarter of 2012.”
Although the size of the declines in traffic has moderated in recent months, the trend hasn’t necessarily been good news for apparel retailers. Cowen and Co. monitored foot traffic for apparel and electronics and found a reversal of fortune, with apparel traffic declining more than electronics traffic in June. For the full month, electronics traffic dropped 1 percent while apparel traffic receded 2.6 percent, with apparel continuing to show a smaller year-to-date decline (1.5 percent) versus electronics (6.2 percent).
Overall traffic was down 2 percent during the final week of June, a smaller decline than the 2.8 percent dropoff in the prior week.
Among the companies in his coverage area, Nomura Group analyst Simeon Siegel expects a 6 percent gain for L Brands and flat results for Gap Inc. and The Buckle Inc. But he finds clients particularly curious about the high valuations of “winners” such as L Brands and the sustainability of upward stock movement among some of those in the specialty sector, including American Eagle Outfitters Inc. and Express Inc.