Discounters in Driver's Seat
June 9, 2008,
If ever there were a haves and have-nots month, May 2008 would qualify. The list of comparable-store gainers, running from Costco up 9.0% and Ross Stores up 7.0% to TJX Cos. up 2.0% and Family Dollar up 1.8% — and Wal-Mart square in the middle with a 4.0% gain — spells out the formula for success in the ongoing retail climate.
The comp-losers list, meanwhile, smacked merchandisers right in the middle. Each and every department store in the habit of reporting monthly sales had a negative-comp story to tell, joined by upscale mass merchant Target.
Target, posting a 0.7% comp decline that president and ceo Gregg Steinhafel noted, "was in line with our planned range," was out of step with Wal-Mart, where consumers seemed to flood into supercenters to buy everyday consumables — at the expense of retailers elsewhere trying to sell fashion goods.
That trend is not expected to change anytime soon: Looking ahead, Target projected June comps from -2% to 0%, against its year-ago comp gain of 3.3%.
Among category sales, home continues to stagnate.
"Sales in the home and furniture category were significantly below trend," Dillard's said in its statement, reporting overall comps down 7.0%.
"Gifts, linens and ladies' career were below company trend," said Stein Mart, which trailed all HTT-covered chains with a 12.4% comp fall in May.
"Textiles and women's apparel were the most challenging," said Jim Famalette, chairman and ceo of Western department store chain Gottschalks, where May comps were down 8.6%.
"Most home categories continued to experience weaker sales," read the JCPenney release. The 1,074-unit department store operator noted its 4.4% comp decline was in line with projections.
However — there was this glimmer: "The home area showed its first comparable store sales increase in more than two years." That remark was included in the Wal-Mart report, which nonetheless focused on groceries, pharmacy and consumer electronics. "In a difficult economic environment for home, the category had positive comparable sales due to an emphasis on presentation of branded merchandise and Mother's Day," Wal-Mart concluded.
And this grace note, from Kohl's: "Home, footwear and men's performed better than the company for the month." However, the month at the 957-store mid-tier chain saw an overall comp drop of 7.2%.
Many retailers reported soft sales in seasonal categories — a warning, in effect, that promotional activity is about to swing up yet again.
"Seasonal categories dependent on weather were soft," was the Wal-Mart takeaway.
"Seasonal categories were challenged throughout ladies' ready to wear, men's, shoes, accessories, and intimate apparel," said Tony Buccina, vice chairman and president — merchandising, Bon-Ton Stores, which recorded a 9.9% comp drop in May.
The Johnson Redbook Same Store Sales Index (SSI) showed a 2.6% comp gain for May among the 39 mostly softlines retailers tracked. In the department store segment, however, the SSI showed a 3.6% comp decline. This reversal came one month after that group of mid-tier and upstairs chains (ranging from Kohl's to Neiman Marcus) had logged its first comp gain since November.
WINNERS AND LOSERS
Same-store sales % change
MAY SALES FOR KEY RETAILERS
Four weeks ended May 31a(dollar amounts in millions)
|2008 sales||2007 sales||Total % chg.||Same-store % chg.|
|a. Reporting periods vary from chain to chain.
b. Costco: 4 weeks and 39 weeks ended June 1.
c. Duckwall-ALCO: 4 weeks and 17 weeks ended June 1.
d. Fred's: Comp sale change excludes 67 stores closed or slated to be closed.
e. JCPenney: comps for stores only; no longer breaks out direct-to-consumer sales.
f. Wal-Mart: 4 weeks and 17 weeks ended May 30; Int'l not included in comps.
g. Family Dollar: 39 weeks.
|The Bon-Ton Stores||$214.3||$234.7||(8.7)||(9.9)|
|Dillard Dept. Stores||$499.7||$527.9||(5.0)||(7.0)|
|J.C. Penney e||$1,344.0||$1,377.0||(2.4)||(4.4)|
|Wal-Mart Stores Inc. f||$31,036.0||$28,258.0||9.8||4.4|
|The Bon-Ton Stores||$914.6||$972.3||(5.9)||(5.9)|
|Dillard Dept. Stores||$2,179.9||$2,291.1||(5.0)||(6.0)|
|Family Dollar g||$5,217.9||$5,202.4||(0.3)||(0.3)|
|Wal-Mart Stores Inc. f||$126,378.0||$115,875.0||9.1||2.8|