June Is Another Weak Month for U.S. Retail Sales

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ARTICLE REPRINTED FROM NYTIMES.COM
June Is Another Weak Month for U.S. Retail Sales
By STEPHANIE ROSENBLOOM
Published: July 9, 2009
The nation’s retailers were already reeling from the new consumer frugality but in June, incessant rain and rising unemployment further dampened sales. Stores that had made strides in recent months reverted to double-digit declines.

Retail Sales in June 2009 Overall, the industry posted a 6.7 percent decline in sales for the month, in contrast to a 3.9 percent increase a year ago, according to the Goldman Sachs Retail Composite Index. Wal-Mart, which had been a bright spot in the retailing world and helped lift the overall industry number, is no longer reporting monthly sales. Retailers are also facing challenging year-over-year sales comparisons because this June there were no tax rebate checks to help bolster shopping.

Apparel and department stores were hurt most as chilly, soggy weather on the East Coast did nothing to inspire summer clothes shopping.

At Abercrombie & Fitch the weakest sales categories were shorts, graphic T-shirts and knit tops. The chain said sales at stores open at least a year, a measure of retail health, fell 32 percent compared with the period a year ago.

Sales fell at other mall stores too, including Zumiez (down 19.3 percent), Children’s Place and Limited Brands (both down 12 percent), Wet Seal (down 11.1 percent), American Eagle Outfitters (down 11 percent), Gap (down 10 percent) and Hot Topic (down 7.9 percent).

All the various department stores posted declines. In the specialty retail stores segment of Neiman Marcus, which includes Neiman Marcus and Bergdorf Goodman stores, sales fell 20.8 percent. Sales at Nordstrom declined 10 percent. Saks fared better than its high-end competitors, posting a 4.4 percent decline that was in part the result of shifting a designer sale into June.

Sales declined 14 percent at Dillard’s, 8.9 percent at Macy’s, 8.2 percent at J.C. Penney, 8 percent at Bon-Ton and Stein Mart, and 5.6 percent at Kohl’s. T.J. Maxx and Ross Stores performed much better, posting 4 percent and 1 percent sales increases respectively.

Tony Buccina, vice chairman and president for merchandising at Bon-Ton, said in a statement that while June started off robust, “the unusually cooler and rainy weather impacted sales of our summer merchandise across all apparel categories.”

The most notable exceptions to the apparel industry malaise were, as expected, Buckle and Aéropostale, the affordably priced niche teenage apparel chains. Aéropostale said it enjoyed record June sales, posting a 12 percent increase. Buckle’s sales rose 9.6 percent. Despite those results, teenage apparel was the worst performing retailing category according to Thomson Reuters.

Even discount chains are struggling. At Costco, which was hurt by lower gasoline prices and foreign exchange rates, sales fell 6 percent. The chain said in a recorded telephone message for investors that food and sundries were its best sellers. Sales of non-food, discretionary items were soft, including cameras, navigation devices and cellphones. Cooler June temperatures hurt sales of air-conditioners.

In yet another sign of consumers cocooning at home, televisions were the big exception in the discretionary category, with unit sales up 50 percent year-over-year.

BJ’s Wholesale Club, also hurt by lower fuel prices, reported a 7.5 percent decline. Sales at Target fell 6.2 percent. Housing values are still depressed and credit remains tight. A report by Thompson Reuters on Wednesday predicted consumers would continue to sit on their wallets as long as unemployment continues to rise.

That will only further pressure retailers who have managed to cut inventory and expenses, but not spur demand.

“For these retail stocks to hold where they’re at and not back down,” said Ken Perkins, president of Retail Metrics, a research company, “they’re going to have to show some signs of improvement.”