How Much Did Promotions Help, or Hurt, Retailers in June?

Will sales in June force retailers to cut or raise their second-quarter forecasts?

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Overall, analysts are painting a bright picture for the month, suggesting that marked-down merchandise drove consumers to the stores to shop without hurting profit margins.

The Thomson Reuters Same-Store Sales Index is expected to rise 4.9 percent in June from the prior year's 3.1 percent gain. Since a 3.0 percent same-store sales gain reflects a healthy consumer, the forecast is encouraging.

"Promotional activity looks higher on the surface, but we see little risk to second-quarter earnings as inventories are well-controlled," said John Morris, a specialty retail industry analysts at BMO Capital Markets, in a research note.

Morris suspects that consumers found few fashion must-have items to inspire them to buy, so sales among the specialty retailers may turn out to be a bit disappointing. But since June is largely a clearance month, that may not be indicative of broader consumer shopping patterns, Morris said.

As a result, he's looking to July to be a much better indication of how consumers will behave in the months ahead. July marks the beginning of the back-to-school shopping season.

Department stores and discounters, as a group, should see the biggest gains, according to analysts surveyed by Thomson Reuters. Warehouse clubstores Costco and BJ's Wholesale are expected to see the biggest gains. (Although their same-store sales are boosted by higher gasoline prices in the latest period.)

A breakdown of the average analyst estimates for the month, as reported by Thomson Reuters, follows:

June 2011 Same-Store Sales Estimates

June 2011 Estimates
June 2010 Actuals
Costco 12.7% 4.0%
BJ's Wholesale 7.0% 3.8%
Target 3.2% 1.7%
JC Penney 2.3% 4.5%
Kohl's Department Store 2.9% 5.9%
Dillards Department Store 3.3% 2.0%
JW Nordstrom 5.0% 14.1%
Saks Department Store 7.0% 2.5%
Stage Stores 1.5% (1.2%)
Macy's 5.1% 6.5%
Gap (2.3%) 0.0%
TJX 2.2% 3.0%
Limited 3.8% 6.0%
Ross Stores 3.4% 5.0%
Stein Mart 1.5% 0.6%
Hot Topic (2.4%) (2.1%)
Wet Seal 1.9% (3.6%)
The Buckle 10.0% (7.3%)
Zumiez 5.6% 10.9%
Walgreen 2.9% 2.0%
Source: Thomson Reuters; Figures in parenthesis are losses.

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