Retailers posted yet another month of dropping same-store sales
as June's figures came in below analysts' already-dismal
expectations amid bad weather and a continued reluctance to
spending by consumers.
Analysts have already said weather would likely hurt the sales
results, since summer seasonal sales were way down because of cool
temperatures and rain in the Northeast and Mid-Atlantic regions.
Several companies have said that was the case. Retailers also
suffer from tough comparisons to last year, when consumers were
still getting their government stimulus checks.
Among the worst performers was Zumiez Inc. (ZUMZ), which posted
a 19% drop. Analysts surveyed by Thomson Reuters expected a 20%
fall.
Abercrombie & Fitch Co. (ANF) posted another month of dour
results, with a 32% same-store-sales drop, compared with analysts'
expectations for a 27% decline. The company hasn't reported growth
since April 2008 and is increasingly shedding its no-markdown
mantra. Cheaper rival Aeropostale inc. (ARO) maintained its recent
gains with a 12% increase in June, beating views.
TJX Cos. (TJX) reported a 4% increase, not the decline which was
expected, saying traffic increased and lean inventories enabled it
to introduce new merchandise. The company also boosted its fiscal
second-quarter earnings estimate to 56 cents to 59 cents a share
from last month's view of 43 cents to 49 cents. Shares were
recently up 4.8% at $32.60.
Fellow off-price retailer Ross Stores Inc. (ROST) saw same-store
sales rise 1%, just above analysts' views, as it jacked up its
earnings target to 73 cents to 75 cents from 60 cents to 63
cents.
One of the big surprises of the day came from Buckle Inc. (BKE),
which saw its 22-month streak of double-digit growth finally end as
the company posted a 9.6% increase, missing analysts' estimates for
a 12% jump at the teen- and 20s-focused purveyor of trendy tops and
edgy jeans and footwear. Buckle's shares were recently down 1.7% at
$28.89.
The industry's results were only the second without Wal-Mart
Stores Inc. (WMT) in 30 years. The world's largest retailer said in
May it would stop giving monthly sales data, following the lead of
other smaller peers in recent years. But Macy's Inc. (M) last fall
began giving such data again, saying the economic turmoil warranted
its investors getting a read on the company's performance more
often.
Expectations for the month were in line with the dreary sales
that have been reported so far this year. A drop in June would mark
the 10th straight month of same-store sales declines, the longest
since Thomson Reuters began collecting the data in 2000.
Wall Street Strategies analyst Brian Sozzi said the new problem
is the state of retail as it moves to the back-to-school season and
the holidays, especially given that retailers will probably have
lots of clearance goods on their floors mixed with new full-price
items because of the slow seasonal summer sales.
Department stores, for more than a year the laggard among the
various retail segments broke the mold - still posting big declines
but beating analysts' expectations - as Macy's 8.9% drop nearly
matched analysts' views.
J.C. Penney Co. (JCP) saw same-store sales fall 8.2%, a smaller
drop than expected. The company also projected a narrower
second-quarter loss than it had predicted and sees same-store sales
this month down 13% to 16%. Luxury retailer Saks Inc. posted a 4.4%
drop, well above analysts' views for a 12% slide. Stage Stores Inc.
(SSI) widely missed expectations with a near-13% drop.
Discounters, which have largely been holding up amid the
recession, reported largely lower results as well. Costco Wholesale
Corp. (COST) had a 6% drop, in line with expectations. Even
excluding gas, U.S. same-store sales fell 1%.
Smaller rival BJ's Wholesale Club Inc. (BJ) continued its recent
outperformance, reporting 2.7% growth excluding gasoline. Target
Corp. (TGT) maintained its woes with a worse-than-expected 6.2%
decline. Target Chairman and Chief Executive Gregg Steinhafel said
the company expects second-quarter earnings performance to meet or
exceed current analysts' estimates of 64 cents a share.
On the apparel side, Limited Brands Inc. (LTD) widely missed
analysts' expectations, posting a drop of 12% where analysts
expected a 7.9% decrease. Children's Place Retail Stores Inc.
(PLCE) also missed analysts' expectations with a 12% drop.
At the same time, Gymboree Corp. (GYMB) boosted its
second-quarter earnings outlook by 10 cents to a range of 19 cents
to 24 cents from its prior estimate of 9 cents to 14 cents.
-By Kerry Grace Benn, Dow Jones Newswires; 212-416-2353;
kerry.benn@dowjones.com