- Spain's Debt Costs Near Danger Level: Is Bailout Next?
- US Markets Will Be Watching Europe—And Jobs Report
- India's Tumbling Rupee Roils Convertible Bond Market
- European Companies Plan for Greek Unrest and Euro Exit
- Japan's Marubeni Nears $5 Billion-Plus Gavilon Deal
- Public Pensions Faulted for Bets on Rosy Returns
- Greece to Leave Euro Zone on June 18: Wealth Manager
- Italy 2-Year Borrowing Costs at Peak Since December
- Euro Bond Wins Supporters, but Details Remain Vague
MOST SHARED
- Greece to Leave Euro Zone on June 18: Wealth Manager
- Greece Pours $22.6 Billion Into Four Biggest Banks
- Spain's Borrowing Costs Near Danger Level: Bailout Next?
- European Firms Plan for Greek Unrest and Euro Exit
- Marubeni Nears $5 Billion-Plus Gavilon Deal
- Facebook IPO Fiasco: 10 Things Underwriters Got Wrong
- Newedge to Leave Greek Stock Market
- Europe Has Wall Street's Bull on a Short Leash
- CP Rail CEO Quits After Proxy Fight With Bill Ackman
- 10 Massive Advertising Campaign Failures
MOST POPULAR
HOT ON FACEBOOK
Retail Results Mixed as Consumers Hunt Bargains
Text Size 
News Editor
Warm weather and sales tied to the Memorial Day and Father's Day holidays helped drive shoppers to stores in June, but the heavy discounting may have hurt retail profits.
 |
Getty Images |
"I think overall the consumer spending is slowing a bit," said Dana Telsey, chief information officer at Telsey Advisory Group.
"I think what we saw at the beginning of the year is a little bit slower now than the middle of the year," Telsey said. "I think overall we're seeing where there's unemployment and higher taxes....consumers, they want to pause a bit."
According to Thomson Reuters, sales were up 3.1 percent in June, just shy of the average analyst estimate of 3.2 percent. Last year, sales fell 4.9 percent in June.
Not only are retailers using discounts, but some are also using unconventional promotions to attract visitors to stores as consumers remain reticent to spend.
Still, there were many retailers that had good news to report. Department store shares are trading higher after J.C. Penney [JCP
Loading...
()
] and Nordstrom [JWN
Loading...
()
] were among those retailers reporting stronger than expected sales.
Penney said sales of summer apparel were strong ahead of the Father's Day holiday.
But some apparel retailers, including the Gap [GPS
Loading...
()
], saw weaker traffic at their stores. Gap reported same-store sales were flat compared with last year.
"June was a difficult month with lighter traffic than we anticipated," said Sabrina Simmons, Gap's chief financial officer. Simmons stressed the company would continue to focus on increasing sales while keeping a disciplined look on their operations.
Discipline has been an important theme in the retail sector as tight inventories have helped retailers weather lackluster consumer demand without too much of an impact on their inventory. But the latest results did wear on some retailers.
Teen retailer American Eagle [AEO
Loading...
()
] trimmed its forecast in the wake of its disappointing results. The retailer now expects its second-quarter earnings to be at the low end of its forecast, which called for adjusted earnings of between 12 cents and 16 cents a share. On average, analysts were expecting the company to earn 15 cents a share on an adjusted basis.
Despite the weakness from Gap and American Eagle, other apparel chains were among those posting the biggest gains. These included Limited [LTD
Loading...
()
], Abercrombie & Fitch [ANF
Loading...
()
], Hot Topic [HOTT
Loading...
()
] and Zumiez [ZUMZ
Loading...
()
].
"The retailers that are doing best are the ones that had less inventory," said Eric Beeder, of Brean Murray, Carrett & Co. "We have a consumer who is really still not shopping, but when they are shopping, they're splurging. And for people who had less inventory, you had better sell through and better margains."
The companies with excess inventory, however, were forced to slash prices on their products, Beeder said. "We're at that point right now where you have to look at individual companies," he said.
Warehouse club store Costco [COST
Loading...
()
] said its sales were hurt by a shift in the Memorial Day holiday, but some analysts speculate its prices may be under pressure from discounting at Wal-Mart Stores [WMT
Loading...
()
]. Wal-mart has been slashing prices aggressively for products such as soft drinks. But sales from the world's largest retailer were not available, as it no longer reports sales on a monthly basis.
Target [TGT
Loading...
()
] also posted a disappointing month. Sales at the discounter rose 1.7 percent compared with a 2.7 percent gain that analysts had expected.
"Sales in electronics, video games, music and movies were particularly soft for the month," said Target Chief Executive Gregg Steinhafel. "We continue to plan our business cautiously." Target said it expects July same-store sales to be up in the low-single digits.
Wall Street Strategies analyst Brian Sozzi said watching consumer spending patterns during the key holidays in June are helpful in determining how spending will shape up for the back-to-school shopping season, which is the second biggest spending occasion after the Christmas holiday season.
"In many respects, the sales were not there," Sozzi said. He also said he is beginning to see a divergence among consumers with some trading down from discounters such as Wal-Mart and Target to dollar stores and to Fred's [FRED
Loading...
()
], a discounter that sells a lot of private-label goods.
To see estimates and results for June's retail sales, see the table below:
June Same-Store Sales |
| Retailers | June 2010 Estimates | June 2010 Actual |
| Costco Wholesale (excluding gas) | 3.6% | 3% |
| BJ Wholesale (excluding gas) | 4.4% | 3.2% |
| Target | 2.7% | 1.7% |
| JC Penney | 3.4% | 4.5% |
| Kohl's Department Store | 6.5% | 5.9% |
| Dillards Department Store | (1.0%) | 2% |
| JW Nordstrom | 9.6% | 14.1% |
| Saks Department Store | 2.0% | 2.5% |
| Stage Stores | 2.0% | (1.2%) |
| Macy's | 6.1% | 6.5% |
| Gap | 3.4% | Flat |
| TJX | 4.2% | 3% |
| Limited | 3.2% | 6% |
| Ross Stores | 5.1% | 5% |
| Stein Mart | (2.0%) | 0.6% |
| Abercrombie | 2.8% | 9% |
| American Eagle | 2.0% | (1%) |
| Aeropostale | 7.3% | 8% |
| Hot Topic | (5.4%) | (2.1%) |
| Wet Seal | (1.8%) | (3.6%) |
| The Buckle | (0.1%) | (7.3%) |
| Zumiez | 8.5% | 10.9% |
| Walgreen | 1.1% | 2% |
| Rite Aid | (0.9%) | (2.5%) |
Source: Thomson Reuters; company reports. Figures in parenthesis are losses. |
- Critical elections are scheduled for Greece in June. Here are some of the players and their roles.
- Our financial system is still not designed to meet the needs of poor families, says this author.
- Statistics show there aren’t many women billionaires compared to their male counterparts. Why?
- Click to see various forms of funding and what entrepreneurs have used to build successful companies.
- Here are some of the most expensive hotels in the world to book. And we mean expen$$ive.
- Always drink responsibly and when you do, try one of these more unusual and tasty drinks. Cheers!
Data is a real-time snapshot *Data is delayed at least 15 minutes
