Soft Home Sales Help in June's Mixed Bag
July 8, 2010,
New York - Department store chains reported fairly solid comparable store sales gains in June, but things were ho-hum at Target, while the major off-price operators continued to impress, and raised their profit projections.
Home furnishings categories were a mixed bag - less than stellar at most merchants, quite strong at others - but soft home has clearly started to put years of absolute, dead-last doldrums behind.
All but two of the 13 major retailers tracked monthly by HTT reported positive comps in June.
JCPenney saw comp sales rise 4.5%, a sweet turnaround from the June 2009 comp decline of 8.2%. The home segment lagged behind apparel at JCP - but there was upbeat news regarding home textiles.
While the home division "continues to be a work in progress," the company said in its recorded sales statement, "sales in soft home merchandise were positive, and considerably outperformed the hard home and window covering categories."
The 6.5% comp gain for June at Macy's Inc. featured a 37.6% year-over-year increase in online sales; the company includes its e-commerce sales in its comps. Terry Lundgren, chairman, president and ceo, pointed to the "My Macy's localization and the increased effectiveness and efficiency of our unified national organization" as factors in overall gains.
Noting calendar shifts, Lundgren stated, "It is important to note that Macy's, Inc.'s same-store sales in May/June combined, plus the Sunday and Monday of Independence Day weekend, were up approximately 5% over the prior year. This is consistent with our year-to-date trend. We are optimistic as we look ahead to our fall merchandise offerings."
Kohl's posted a 5.9% comp gain for the month, led by the footwear and men's divisions. Kevin Mansell, chairman, president and ceo of the 1,067-unit mid-tier retailer, said that e-commerce sales are running "almost 50%" above 2009, year-to-date. Kohl's called its current inventory position "comfortable."
Dillards posted a 2.0% comp gain for June; the southern regional department store operator's terse sales statement did not mention home as either above or below trend.
Bon-Ton Stores saw a comp gain of 1.4%, with home among the weaker-performing departments. Tony Buccina, vice chairman and president - merchandising, still waxed optimistic as he said the 278-store retailer anticipates "new home assortments for our July semi-annual Home Sale."
Home performed in the middle of the merchandise segments at Target, as the big upscale discounter posted a modest comp store gain of 1.7% for June. "Comparable store sales in home were down slightly," the 1,740-store company said in its recorded sales statement, "with a mid-single-digit increase in lawn and patio, and the softest performance in domestics."
In sharp contrast, both leading off-price operators sounded a high note on home. At TJX Cos., June comps rose 3% - but home convincingly outperformed this gain.
At the 328-store HomeGoods unit, June comps were up 8%, and that was against a robust 10% comp gain in June 2009, said Sherry Lang, senior vp, global communications. "We are extremely pleased with the consistency of HomeGoods' performance, particularly as this division begins to anniversary very challenging comparisons," Lang said, adding that comps were also up 8% in home fashions at the cornerstone MarMaxx Group (Marshalls and T.J. Maxx).
TJX raised its second-quarter earnings guidance to 70 cents to 73 cents per share (in the range of 15% to 20% over the same period one year ago), and its full-year EPS to $3.24 to $3.33 (up 14% to 17% over last year).
Ross Stores' comps climbed 5% in June. "Home, dresses and shoes were our strongest merchandise categories," said Michael Balmuth, vice chairman and ceo.
The gains for these segments were "in the low-double-digit percentage range," added John Hall, senior vp and cfo.
Ross raised its second-quarter earnings guidance to $1.00 to $1.02 per share. Hall said, "This updated guidance represents a projected 22% to 24% increase on top of a 52% gain in last year's second-quarter when EPS were 82 cents."
The warehouse membership clubs fared well, although Costco saw much of its June comp increase of 3% coming from its international unit, which posted a comp gain of 8%; cutting out the effect of inflation in gasoline prices, the U.S. division gained just 1% in merchandise comps.
Subtracting for inflation in gasoline prices, Eastern regional club BJ's posted a June comp gain of 3.2% in merchandise.
Neighborhood discounter Fred's Inc. reported a comp sales gain of 1.7% for the month, compared to an increase of 0.2% in June 2009. That brought the year-to-date comp gain to 2.3% at the 672-store chain, on top of a first-five-months gain of 1.7% last year.
At soft lines specialty chain Stein Mart, comps were off 0.6% in June - but home was among the stronger performing categories, the company said.
Rural general merchandiser Duckwall-ALCO Stores saw comps dip 6.6% in June; comps are down 4.9% year-to-date. Rich Wilson, president and ceo, said the 256-store company's inventory position is favorable for the coming back-to-school season, and that "recent organizational re-alignment has significantly improved our operational disciplines and efficiencies."
The 31-company Johnson Redbook Same-store Sales Index (SSI) for June was up 3.1%, coming after a 2.6% gain in May and a 0.9% gain in April. About three-fourths of the 31 merchants posted positive comps for June. Department stores were the standout for the month; this eight-company group posted a 5.9% comp gain, dramatically reversing its 9.1% comp decline in the June 2009 SSI.