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US June retail sales rise 2.5% as anxiety remains


07-06-2012 10:55 BJT

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Thursday, with most of them, including Limited Brands, Gap, Target, TJX, Ross Stores, Nordstrom, Saks, and Macy's, reporting modest sales increases at established stores. However, sales were down at Kohl's and Wet Seal.

The sales growth in June was seen as modest due to the most difficult year-over-year comparison in five years. It is also a weak month for retail sales ahead of the back to school season, the second-biggest selling period after the holiday season.

Consumers were also in a pulled back mode on spending during the month amid concerns about jobs and the economy. Shoppers were weary, despite the drop in gasoline prices for eleven straight weeks.

A report released from the Conference Board on June 26 showed that consumer confidence dropped for the fourth straight month to the lowest it has been in five months. The U.S. consumer confidence index fell to 62.0 in June from a downwardly revised reading of 64.4 in May.

Comparable-store sales or comps is a key retail industry performance metric to gauge activity at store locations that have been open for at least a year. Analysts polled by Thomson Reuters expected the retailer's comparable store sales to increase a mere 0.5 percent in June, much lower than the 6.7 percent rise in June last year.

Some of the retailers topped analysts' estimates, except Target, Macy's, Kohl's, Gap and Wet Seal.

Apparel retailer Limited Brands, Inc. (LTD), the operator of Victoria's Secret and Bath & Body Works chains, said its June comparable store sales rose 7 percent, reflecting the continued strength of its Victoria's Secret Stores brand. The result exceeded Street expectations of a 2.4 percent growth. Meanwhile, net sales edged down to $1.077 billion from $1.080 million last year.

Another specialty apparel retailer Gap, Inc.'s (GPS) June comparable sales were flat, including the associated comparable online sales, pulled down by the poor show at its international division. Street was looking for a 0.1 percent increase. Net sales grew 2 percent to $1.41 billion from $1.38 billion a year ago.

Specialty retailer to young women, Wet Seal, Inc. (WTSLA) stated its comparable sales declined 9.0 percent in the month, while analysts estimate was for a 7.7 percent drop. Based on brands, the Foothill Ranch, California-based company's June comparable store sales decreased 8.5 percent at Wet Seal and 11.9 percent at Arden B. Net sales declined 7.1 percent.

"E-commerce sales declined 5% in June compared to a 17% decrease for the prior year month. June represented the anniversary of our strategic efforts to transition to a higher penetration of full-price selling and better align e-commerce merchandising with our stores," CEO Susan McGalla said in a statement.

Among discount retailers, Minneapolis, Minnesota-based Target Corp. (TGT) reported a 2.1 percent increase in comparable store sales for the month, missing analysts' expectations of a 2.4 percent growth. Total monthly net retail sales grew 2.6 percent to $6.42 billion from last year.

"Following better-than-expected performance in May, our June comparable-store sales were near the low end of our expected range," said Gregg Steinhafel, chairman, president and CEO of Target.

Off-price retailer TJX Cos., Inc. (TJX) reported that June comps were up 7 percent and total sales also increased 9 percent from last year to $2.3 billion. Analysts' were looking for a 4.2 percent growth in comps.

"Customer traffic during the month increased substantially at every division which speaks to the tremendous appeal of our values, brands and fashions for consumers," TJX CEO Carol Meyrowitz said in a statement.

Another discount retailer Pleasanton, California-based Ross Stores, Inc. (ROST) said June same-store sales increased 7 percent, topping Street estimates for a growth of 4.8 percent. Total sales rose 12 percent to $886 million from a year ago.

"Based on our above plan sales and gross margin performance in May and June, and our continued projection for a 2% to 3% increase in July same store sales...," Ross Stores CEO Michael Balmuth stated.

Fashion specialty retailer Nordstrom, Inc. (JWN) reported a 8.1 percent increase in same-store sales for June, well above analysts' estimate for a 4.7 percent rise. Preliminary total retail sales also grew 12.6 percent to $1.04 billion from last year.

Among department store chains, Cincinnati, Ohio-based Macy's (M) reporting that same-store sales for June increased 1.2 percent over last year, lower than the 1.9 percent growth analysts were expecting.

Meanwhile, online sales, which is included in the same-store sales calculation, at macys.com and bloomingdales.com combined, increased 31.8 percent in June. Net sales also grew 0.8 percent.

"June sales were below expectations. In part, this was a function of a macroeconomic environment that is stagnant at best, and lower spending by tourists in cities such as New York," Chairman, President and CEO Terry Lundgren noted.

"In June, we were pleased with bright spots such as strong Father's Day sales, as well as results from Macy's major nationwide promotion of Brazil-inspired fashion," Lundgren added.

Menomonee Falls, Wisconsin-based Kohl's Corp. (KSS) reported a 4.2 percent decline in comparable sales for the month, while Street expected it to decline 3.2 percent. Total sales also declined 2.6 percent year-over-year to $1.71 billion.

Kevin Mansell, Kohl's chairman, president and chief executive officer, said, "Though June sales were again lower than expectations, we are encouraged by improved sales in the latter weeks of the month as we continued to build inventory levels."

Fashion retail store chain, New York-based Saks, Inc. (SKS) reported that comparable store sales increased 6.0 percent in June, beating analysts expectations for the 4.7 percent growth. Total owned sales also grew 6.0 percent to $274.0 million from last year.




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