Middle-market retailers sag in July comps
August 7, 2008,
New York – Evidence mounted that consumers are focused on the necessities – meaning that back-to-school shopping for fashion goods will be sluggish – as retailers dependent upon softlines suffered while commodity-based merchants thrived in July.
The main glimmer of optimism among the struggling chains in the middle was the common refrain that inventories have been strictly managed.
JCPenney, which posted a 6.5% comp decline (against a very strong 12.0% comp gain in July ’07), stated that it is focused “on effectively managing its inventory position, and, as previously forecasted, ended the July period with comparable store inventories below 2007 levels.”
Indeed, JCP announced, “Due to better than expected sell-through of promotionally priced merchandise and continued expense management measures taken over the course of the quarter as part of the company’s Bridge Plan, JCPenney now expects second quarter earnings to be in the range of 50 cents to 52 cents per share. The company's previous guidance was for second quarter earnings to be approximately 38 cents per share.”
“July was a month driven by clearance sales of spring and summer merchandise. Our inventory levels in these clearance and transitional categories were significantly lower than last year, affecting sales results, but leading to improved gross margins,” said Larry Montgomery, chairman and ceo of 957-store Kohl’s, where July comps fell a sharp 10.4%. “We enter the fall season well-positioned and able to react quickly to any improvement in sales trends.”
“Our inventory is fresher with less clearance than the prior year. On a comparable store basis, inventory was down approximately 9%,” said Tony Buccina, vice chairman and president - merchandising, 280-store Bon-Ton.
“Although comparable store sales in home and apparel were slightly negative during the period,” said Wal-Mart, “the stores had much cleaner inventory in these areas and therefore, much less clearance than in the same period last year.”
Nearly every merchandiser reported dragging sales volume in soft home categories, a situation that has become the norm.
The warehouse club sector was far and away the winner among the 40-retailer Johnson Redbook Same Store Sales Index (SSI) in July, which overall posted a 2.1% gain, following the 3.7% rise in June. While flattening, the gain did represent the fourth consecutive month upticks for the Index.
Click here for July sales report at key retailers.