--Sales turn sluggish after strength early in year
--Macy's, Kohl's miss expectations
--Results raise questions about back-to-school sales
(Updates with retailer information throughout)
By Karen Talley
U.S. retailers turned in soft sales for June, as momentum that
was seen earlier in the year waned.
The less robust sales growth appears in part to be the result of
warm weather purchases being made earlier than usual this year
because of the unseasonably warm winter.
June also saw mixed weather and even steep promotions during the
month did not bring out consumers in droves. There have also been
signs of stress in the economy.
"Macroeconomic issues continue weighing, making the consumer
more reluctant to spend," said Nancy Liu, retail strategist at Kurt
Salmon. "This is going to give retailers pause for back-to-school
selling."
The results were indeed soft when measured against robust buying
that occurred earlier in the year, and back-to-school buying
generally starts in late July and early August, with retailers
depending on the spending for a big boost to their coffers.
The 18 retailers tracked by Thomson Reuters reported a 2.5% gain
in June same store sales, the smallest monthly gain in almost 3
years, and compared with 7.7% growth a year ago. The retailers are
up against the most difficult comparison in nearly five years, and
edged past expectations for 2.4% growth.
Target Corp. (TGT) reported same-store sales rose 2.1% in June,
near the low-end of its expected range and below analysts'
expectations of 2.4%. Target said it remains on track to meet its
second quarter sales and earnings goals. Target said same-store
sales were strongest in its food and health and beauty segments,
while its home and hardlines divisions saw declines in same-store
sales. Regional performance was strongest in the Midwest and West
but below company average in parts of the South.
Mid-tier department stores had a tough time. Macy's Inc. (M) had
a rare miss, with same-store sales rising 1.2%, when 1.9% was
expected. The retailer cited a "stagnant at best" macroeconomic
environment and sales interruptions because of renovations at its
Herald Square store in New York City, the company's biggest.
Rival Kohl's Corp. (KSS) reported a 4.2% drop in
comparable-store sales, when a 3.2% decline was projected and said
it sees second quarter earnings per share coming in at the low end
of its previous guidance of 96 cents a share to $1.02 a share.
Chief Executive Kevin Mansell said he was "encouraged" by improved
sales in the latter part of the month as the retailer built
inventory.
The high end remained resilient, with Nordstrom Inc. (JWN)
posting an 8.1% increase in same-store sales when 4.7% was
expected, and Saks Inc. (SKS) reporting a 6% rise when 4.7% was
projected. Saks said strongest categories during the month included
women's shoes, men's private brand, tailored clothing, and shoes;
and cosmetics and fragrances.
Costco Wholesale Corp. (COST), a barometer of goods ranging from
food to apparel, reported U.S. same-store sales excluding fuel rose
3%, when 3.5% was expected. The company said it was hurt by the
timing of Independence Day, given last year the holiday fell on the
first Monday of the July reporting period and pre-holiday shopping
was captured in June. Costco said regions with the strongest sales
included the Midwest and Northwest.
Off-price retailers were the only sector to lift guidance
expectations, demonstrating the continued propulsion of the frugal
consumer. TJX Cos. (TJX) posted a 7% increase in same-store sales,
topping expectations of 4.2%, with the company saying customer
traffic significantly increased in every division. TJX lifted its
second-quarter and full-year outlooks to 52 cents a share to 53
cents a share, and $2.31 a share to $2.39 a share,
respectively.
Ross Stores Inc. (ROST) reported same-store sales increased 7%
in June, beating analysts' expectations of 4.8%. The company raised
its second-quarter guidance to 77 cents a share to 78 cents a share
amid above-plan sales and gross margin performance in May and
June.
Gap Inc. (GPS) posted flat same-store sales, when a 0.1% rise
was expected. All three North American divisions--Gap, Banana
Republic and Old Navy--reported gains while international
same-store sales dropped 14%. "We're pleased with our overall sales
performance in June, especially the continued positive trend in our
North America business," Chief Executive Glenn Murphy said.
Limited Brands Inc. (LTD) continued its streak, with the
operator of Victoria's Secret and Bath & Body Works posting
June same-store sales growth of 7%, more than double expectations
for a 2.4% gain. The company's Victoria's Secret direct sales
segment swung to a comparable store sales gain as other divisions
including Bath & Body Works and Limited Brands saw smaller
increases than the same period last year.
Department store Stage Stores Inc. (SSI) reported a 3.3%
increase in comparable-store sales when 2.7% was expected. The
company said sales were broad based, with cosmetics, footwear, home
and gifts and men's categories exceeding the company average.
Geographically, the Northeast, South Central, which includes Texas,
and Southwest regions outperformed, the company said.
Teen retailer Buckle Inc. (BKE) posted its first same-store
sales decline in two-and-a-half years, with its 2.5% decline coming
in worse than the Street's expectations for sales to be flat.
--Victoria Stilwell contributed to this article
Write to Karen Talley at karen.talley@dowjones.com