Redbook tops target for first time in 2 years

Don Hogsett, August 10, 2001

New York — Getting a big lift from July clearance sales — and the first wave of rebate checks — same-store sales at the nation's big discounters surged sharply higher during the fourth and final week of July, rising by 6.2 percent over June, following up on another big 5.4 percent increase the week before, according to the Redbook Retail Sales Average.

Buoyed by the strong finish, mass merchants drove their sales for the entire month up by 4.8 percent over June levels, easily beating a target of 3.8 percent.

Driven by the strong discounter performance, the overall Redbook Average moved up by 2.5 percent during July, handily beating a target of 2.1 percent — the first time in almost two years, since September 1999, that sales for a full month actually exceeded plan. But proving the point that strength is always relative, when measured on a year-over-year basis, the Redbook Average eked out a smaller gain of 1.9 percent.

Even department stores fared somewhat better during the closing weeks of the month — sales were down by 1.1 percent, but even that was better than the 1.5 percent drop recorded earlier in the month.

Driven by the strong mass merchant results, the overall Redbook Average rose by 3.4 percent during the closing week of July, improving on a 2.8 percent increase the week before.

For all of last month, the Redbook Average moved up by 2.5 percent, beating planned growth of 2.1 percent — the first time in almost two years, since September 1999, that sales for a full month actually exceeded plan.

But every silver lining carries with it a cloud, and in this case the clearance sales that drove the relatively strong results could put a corresponding squeeze on margins. "Since July is a clearance month, and retailers have promoted heavily to drive sales during the economic slowdown, they point out that elevated volumes do not automatically imply strong margins," said Redbook analyst Catlin Levis.

"Discount stores had a more satisfactory month," Levis noted. "Basic consumables. Food and pharmacy items and hard lines, rather than apparel, sustained business in this sector. Nevertheless, retailers are aggressively making smooth inventory shifts into the fall season and, in certain cases, noticing consumer demand for fall-related — including Back-to-School — merchandise."

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