May seems to have let fashion down — or vice versa.
Any hopes of quick end to the brutal first quarter trend, which had department stores and specialty stores alike yowling in pain, faded as Gap Inc., L Brands Inc. and The Buckle Inc. weighed in with comparable sales declines for May.
Gap Inc.’s comparable sales fell 6 percent for the month, with Banana Republic 11 percent drop and Old Navy’s 7 percent fall offsetting a lesser 3 percent decrease at the retailer’s flagship business.
The company’s total sales fell 5 percent to $1.18 billion.
For Wall Street, not so horribly bad overall was good enough and investors pushed the stock up 4.9 percent to $19.22 in afterhours trading.
“As we move into the second quarter, we are continuing to make progress against our recently announced measures while maintaining the financial discipline we are known for,” said Sabrina Simmons, chief financial officer.
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Investors might have been relieved that results weren’t worse, but touting one’s financial discipline is something of a tepid come-on to investors much more oriented toward growth.
There was as glimmer of hope in the Memorial Day holiday, which this year was taken from fiscal May comps and will be added to June’s. While Gap said May was challenging overall, the company noted that “performance improved leading into” the long weekend.
Craig Johnson, president of Customer Growth Partners, said retailers’ sales took a big step down in late March and April and, for the most part, remained tepid.
“The only good news about May was at the very tail end, at the Memorial Day weekend, was quite strong, particularly outlet malls had some of their best business,” Johnson said. “It was the best Memorial Day, we think, in a couple years.”
But he holds out little hope that the long weekend marked a turn and said that retailers this year will continue to suffer from soft traffic at the mall, and emphasis on services and experiences and relatively weak real disposable income for consumers.
“Even for people who do have some disposable income to spend, it’s getting increasingly gobbled up,” he said. “There’s a retail crowding out effect. Mandatory non-discretionary spending on services — particularly health care, insurance, housing and education, meaning student debt — are all up.”
Johnson added the discretionary spending that’s left over is going more toward services than goods, including Netflix, data plans, Amazon Prime, travel, cruises and so on.
With a core annual retail market of $3.5 trillion in the U.S., Johnson said there’s still room to make money, but said stores have to give newness to shoppers.
He said there were individual items doing well, including sandals, destroyed denim shorts and rompers, but that overall there was still too much sameness in the market.
And consumers have yet to feel they’re on solid ground, with the two major reports on consumer confidence showing conflicting readings of sentiment.
L Brands said May comparable sales came in flat and were negatively impacted by about 2 points by a later Memorial Day compared with last year. Excluding e-commerce, store comps dropped by 1 percent.
The timing of the long Memorial Day weekend will help feed comps in June, which the retailer said would be up in the low-single digit range.
L Brand’s total May sales increased 2 percent to $816.6 million. Inventories rose by 8 percent and the company said the margin rate was down significantly versus last year, although the company wouldn’t divulge that number.
Victoria’s Secret’s May comp sales dropped 1 percent from last year. The retailer said strength in the Pink business was offset by declines in beauty and core lingerie bras. Bath & Body Works’ total comps increased 3 percent and store only comps increased by 2 percent.
The Buckle Inc. reported May comp store sales dropped 11 percent for the month as net sales decreased 10.4 percent to $67.4 million.