Department stores, teen chains lead retail sales in June
The start of summer break sent teens and other shoppers to the mall in June, but sales remained lackluster at many of the nation’s largest retailers.
Major chain stores posted a 3.1% sales increase last month compared with a year earlier, according to Thomson Reuters’ tally of 28 retailers released Thursday.
Those results fell slightly short of expectations. Yet perhaps more disconcerting, the results suggested that while the nation’s retail recovery continues, the pace has slowed since the first quarter.
Such results were a troubling sign on the eve of the industry’s back-to-school shopping season, which, after the holidays, is the most important time for retailers.
“It truly was a mixed month and has to be classified as disappointing,” said Ken Perkins, president of research firm Retail Metrics Inc. “Not the kind of momentum we wanted to see here.”
All told, 56% of retailers missed expectations, Thomson Reuters said. Although the overall sales figure was positive, analysts warned that last year’s dismal results were easy to beat.
People’s willingness to spend has continued to be hampered by sluggish housing and job markets, which have caused consumer confidence to remain low, analysts said.
Even during good times, June is traditionally a slow month for merchants, who use the time to clear out merchandise in advance of the crucial back-to-school shopping season. With the health of the retail recovery still up in the air, many stores resorted last month to the deep discounting practices they used during the height of the recession.
It’s a tactic that, at least in the short term, helped draw shoppers to the mall.
At Beverly Center in Los Angeles this week, some shoppers said they continued to spend frugally.
“I’ve been out of a job for three months,” said Jimmy Ferrareze, 43, of Hollywood. “I’m still not shopping as much as I used to, unless I get a great discount. Right now, I’m refusing to pay full price for anything.”
Department stores and teen chains — sectors that were among the hardest hit during the recession — were the strongest performers last month, led by Nordstrom Inc.’s 14.1% sales gain. Analysts said warm weather helped boost sales of summer apparel including swimwear, shorts and tank tops.
Macy’s Inc. beat expectations with a 6.5% increase, Kohl’s Corp. saw sales rise 5.9% and J.C. Penney Co. posted a 4.5% gain.
Beleaguered teen chain Abercrombie & Fitch Co. was the biggest surprise of the month, with a 9% sales increase; analysts surveyed by Thomson Reuters had expected a 2.8% gain. Competitor Aeropostale Inc. reported an 8% increase.
Jacob Curry, 19, said he was spending a bit more lately after slashing expenses such as shopping trips and meals out last year. At Beverly Center, he’d just finished buying a T-shirt from Heritage 1981 — on sale for $4.99 — to wear at the beach.
“I think the economy has picked up a bit,” said Curry, a sophomore at USC. “This year, it’s still a cutback, but not as much.”
But the teen sector was negatively affected by a couple of Southland retailers: Foothill Ranch-based Wet Seal Inc., which posted a 3.6% decline, and City of Industry-based Hot Topic Inc., with a 2.1% drop.
Apparel seller Gap Inc. — parent of the Gap, Banana Republic and Old Navy chains — said June sales were flat, missing expectations.
“June was a difficult month, with lighter traffic than we anticipated,” Chief Financial Officer Sabrina Simmons said.
Results are based on sales at stores open at least a year, known as same-store sales and considered an important measure of a retailer’s health because it excludes the effect of store openings and closings.
Also Thursday, a report by the Federal Reserve showed that tight lending standards continue to remain a drag on credit. Demand for credit cards and other forms of revolving credit was especially weak in May because of a significant drop in consumer spending.
“We believe a mixed bag of June sales results will likely pressure the group and add further fuel to the concerns regarding back-to-school and holiday season,” retail analyst Betty Chen of Wedbush Morgan Securities wrote in a note to investors. “We anticipate consumers to remain event-driven and price conscious.”
When Jill Gutierrez, 30, headed to the Bloomingdale’s at Beverly Center, she’d planned to buy a gift card for her boyfriend’s mother and a pair of sunglasses for herself. But the sales account manager from West L.A. began having second thoughts.
“Do I really need sunglasses? Not really — I just really want them,” she said. “I’ll either put it off or buy a cheaper brand.”
