June 5, 2009
U.S. retailers continued to struggle with weak sales again last month as even heavy discounting at some pricier chains failed to lift the sector.
Discounters stood out as having the best results amid a bleak May. Some of the better performers were chains offering department-store cast-offs while luxury-goods companies and midpriced department store chains continued to suffer.
“What we’ve seen recently is a very strong sentiment and sensitivity toward value” said Tom Wyatt, president of Gap Inc.’s Old Navy division. The low-priced unit of Gap posted a 3% increase in sales even as its parent reported overall sales at stores open a year declined 6%.
TJX Cos. reported a 4% increase in stores open more than a year. Ross Stores Inc. posted a 4% increase, while Kohl’s Corp. reported a 1% decline from a year ago. Their showings illustrate “the discount apparel format is starting to emerge” from the decline in consumer spending, said Brendan Langan, an analyst at retail consultants Management Ventures Inc.
Still, overall sales at stores open at least a year, a closely watched measure of retail health, slid 4.4%, according to an index of 28 retailers compiled by Retail Metrics Inc. Results didn’t include industry behemoth Wal-Mart Stores Inc., which stopped releasing its monthly sales figures. By the same measure, April sales declined a less steep 2.7%.
Among those reporting declines, Target Corp. said same-store sales fell 6.1%, Costco Wholesale Corp. posted a U.S. same-store sales drop of 1% excluding fuel, and BJ’s Wholesale Club Inc. said sales fell 6.8% from a year ago. BJ’s said it faced a difficult comparison against higher gas prices last year.
In part, all retailers faced a similar hurdle compared with results from a year ago: Government checks, meant to boost the economy, had a positive impact on sales throughout the summer of 2008. “We didn’t have that boost this year,” said Thomson Reuters retail analyst Jharonne Martis.
May’s steeper slide may show retailers efforts to woo shoppers with discounts are being ignored. Hot Topic Inc., the teen retailer, discounted its denim prices by as much as 30% and 40%. Abercrombie & Fitch Co. shifted from its full-price strategy by erecting big summer clearance signs in front of stores. Yet neither returned high dividends: Same-store sales at Hot Topic fell 6.4% last month, and Abercrombie & Fitch reported a 28% decline, far more than analysts had predicted.
Aeropostale Inc. offered a rare bright spot among middle-tier, teen apparel retailers, posting a 19% increase in same-store sales. Buckle Inc. posted a 13.4% increase, its 22nd month of double-digit gains.
In the luxury sector, Saks Inc. and Nordstrom Inc. reported steep declines, reflecting the continued woes for high-end retailers. Mid-priced department stores did not fare much better. Dillard’s Inc. said same-store sales fell 12%, Bon-Ton Stores Inc. reported a 12.1% decline while at Macy’s Inc. same-store sales fell 9.1%
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