Retail Chains Report Strong Gains in June
Shoppers pushed retail sales higher than expected in June as rising temperatures sparked demand for summertime goods, but much of the gain came from easy comparisons with last year.
Sales at stores open at least a year jumped 5.3% to $64.2 billion, according to the International Council of Shopping Centers’ tally of 70 chains nationwide. The group said it was the strongest monthly showing since May 2004.
June typically represents nearly 10% of retailers’ annual sales, second only to December’s average of 15%.
Weather played a significant role this year, luring shoppers to swimsuits, air conditioners and other warm-weather products, said Michael Niemira, chief economist for the shopping center council. It was one of the 10 warmest Junes on record, whereas the same month last year was unusually cool, he said.
“That really does matter, both as a catalyst for traffic and also for sales,” said Niemira, who had raised his sales estimates throughout the month, finally settling on a projected increase of at least 4.5%. “It’s more than just seasonal goods. You get people in the store -- which is half the battle -- and there’s certainly a spillover effect.”
California companies were once again among the strongest performers. Foothill Ranch-based Wet Seal Inc. -- which recently closed about 150 stores after a protracted sales slide -- posted a 59.3% gain in same-store sales, considered a key measure of a retailer’s health.
Bebe Stores Inc. of Brisbane logged a 31.4% increase. Guess Inc. of Los Angeles surpassed expectations, posting a 11% gain.
Gap Inc. of San Francisco reported flat same-store sales as its U.S. Banana Republic stores logged a 6% drop. Still, the company said, it expected earnings of $1.44 to $1.48 a share for the current fiscal year, more than the $1.39 that analysts were expecting.
Gap called June a transitional month during which its stores, which also include the Old Navy chain, cleared merchandise to make way for new products arriving this month.
June is, in part, a setup month for the important back-to-school selling season, which already has begun to shift into gear. Many retailers marked down merchandise last month to move hard-to-sell spring merchandise and make way for early fall products.
All retail categories monitored by the shopping center group, except furniture store chains, made advances in the month, with luxury stores and teen retailers once again posting particularly strong results.
Nordstrom Inc. rose 8.1%, 1.5 percentage points more than expected, while Abercrombie & Fitch Co. and American Eagle Outfitters Inc. exceeded forecasts with increases of 38% and 28%, respectively.
Department stores had their strongest month since March 2004, collectively rising 5.5%, while discounters gained 5%. Target Corp. logged a better-than-expected 9% increase, and Wal-Mart Stores Inc., the world’s largest retailer, said sales rose 4.5%, its biggest monthly gain in more than a year.
However, the nation’s largest trade group issued a report Thursday cautioning that retailers still believed that consumers were “hesitant to splurge” and that their ability to price goods as they would like was weak. In all, June was really just a “relatively average month” for retailers, National Retail Federation Chief Executive Tracy Mullin said in a statement.
“Warm weather and Father’s Day spending brought consumers into the stores last month,” she said, “and retailers are hopeful that early back-to-school promotions will keep them coming back for the remainder of the summer.”
The Morgan Stanley retail index of 38 stocks closed at 160.93 on Thursday, down 0.21 point.
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Warming trend
Percentage change from a year earlier in June sales at stores open at least one year
*--* Company % change Wet Seal +59.3% Bebe +31.4 Guess +11.0 Target +9.0 Nordstrom +8.1 J.C. Penney +7.4 Ross +6.0 Pacific Sunwear +4.5 Wal-Mart +4.5 Federated +2.9 Gottschalks +0.5 May +0.7 Gap 0 Limited Brands 0 Hot Topic -3.3
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Sources: Times wire services, company reports
Los Angeles Times
