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Bon-Ton, Warnaco & Retail Sales

Sales warmed along with the weather in May but the improvement will be a relative one. May saw a rebound from the low levels of same store sales that we saw back in April (worst since 2001.) Still it isn't hard for apparel companies to improve from a weak the baseline. However, year over year, retailers are expected to report the weakest sales gain in four years. Given that we are now entering the summer season, the months ahead are heavy on markdowns and light when it comes to shopping activity.

It is market week here in New York. One important element of retail news is hearing just how heavy orders at apparel companies are right now as manufactures sell product to retailers for the all-important Christmas holiday.

Bon-Ton Department Store
AP
Bon-Ton Department Store

Bon-Ton's CEO Bud Bergren says that despite high gas prices and a shaky housing market, the department will stock inventory around the same level as last year. Sales right now at Bon-Ton were a bit weaker than Wall Street expected coming in up 1.2% for May. The bulk of that comp came from the Carson's store segment (comp up 4.9%) of the Bon-Ton business. Bergren blamed growing pains from integration issues for dragging down Bon-Ton's recent business but said that the store is recovering from the "fiasco" of April's very weak comps. Apparel is once again the strongest segment of the business this May and furniture continues for the fifth straight month, to be the weakest.

A sign Bergren says of the problems in the housing market more than a strain on the core Bon-Ton consumer ($75,000 income level) Looking ahead Bon-Ton should see a strong June thanks to Father's Day related transactions. Expect July to be weak as Bergren says, that month is just all about clearing out inventory for back to school items. Bergren says he hopes home furnishing sales will rebound soon as the company adds three more furniture outlets to its existing eight business but Bon-Ton isn't bulking up on that inventory just yet. Listen to Bergren's forecast for sales this year.

More Consolidations In the Future
On the product manufacturer side of the equation, Warnaco's CEO Joe Gromek says he's got his eye on the international consumer market more than sales here in the U.S. Forty-eight percent of WRNC's revenue came from outside the United States and Gromek says he expects Russia will soon become the second largest segment of the business after Italy. The Calvin Klein brand is the core of Warnaco's sales growth right now and Gromek is hoping to expand the CK brand into children's wear. Take a listen to what opportunities Gromek is seeing abroad.

I'm live at the Piper Jaffray Consumer Conference on Thursday. Be sure to check my blog for updates on the latest new line from Crocs, holiday orders at Phillips Van Heusen and the latest updates from the lineup of retail CEOs.

Questions? Comments? retaildetail@cnbc.com