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Merchants: 'Everything must go...now'

Andrea Lillo -- Home Textiles Today, August 11, 2003

Clearance was the word of the month, as retailers tried to clear out inventory to prepare for the fall and Back-to-School season.

However, the month proved to be a mixed bag as some companies were pleased by the results of the month while others were less so.

Wal-Mart Stores grew 11.9 percent to $18.630 billion, up from $16.655 billion. The Wal-Mart division went up 11.5 percent to $12.628 billion, Sam's Club up 8.7 percent to $2.487 billion and the International division up 15.4 percent to 3.514 billion.

JCPenney's comp-store sales grew as well, by 3.7 percent, while total sales were up by 2.1 percent. Home was one of the strongest categories for the retailer for July.

In addition, JCPenney saw its catalog/ Internet division leap ahead by 10.6 percent, well above plan. Print media and Internet sales on a combined basis increased significantly, the company said. Internet sales continue to experience strong growth, increasing by more than 60 percent for both the month and the quarter.

Target Corp. saw its overall company comps at 3.1 percent, while the Target division was up by 4.3 percent. Home decor was one of the poorest performers for the division last month. Mervyn's and Marshall Fields both fell for the month, down 5.8 percent and 2.4 percent, respectively.

Meanwhile, Sears was "pleased" with its July sales, said Alan Lacy, chairman and ceo, although the company saw decreases in both total and comp store sales, by 0.3 percent and 0.8 percent, respectively. In its full-line stores, the total home group was down in the single-digit range, and then its home fashions/household goods segment was down in the low-double-digit range. The Great Indoors was also down, in the mid-single-digit range.

Federated slipped a bit in total sales and comp-store sales, by 0.5 percent and 0.4 percent, respectively.

"Since July is primarily a clearance month, our sales results were impacted by lower inventory levels in our stores," said Terry Lundgren, president and ceo. "But on the earnings side, a stronger than anticipated sales trend combined with tighter inventory management benefited Federated's profitability. We now expect our second quarter earnings to be in the range of 60 cents to 63 cents a share, up from our prior guidance of 50 cents to 55 cents a share."

Home fashions at the MarMaxx group at TJX eroded by 3.0 percent for the month, while overall the group had a 1.0 percent increase. TJX's other divisions saw positive comps, with Winners/HomeSense up 2.0 percent, HomeGoods up 5.0 percent, TKMaxx up 4.0 percent, and A.J. Wright up 13.0 percent. In addition, the company's average per store inventories, including warehouses, were up 5.0 percent.

Sales at Kohl's jumped 21.4 percent for the period to $700.8 million. The average transaction was down about one percent, it said, while the number of transactions increased 7.0 percent. The productivity of its 70 new stores is running at or above the 70 percent to 80 percent of the average store range, Kohl's added. It is pleased with how its clearance has been performing so far, and inventories are up 18.5 percent, in line with square footage growth. It expects a 3.0 percent comp increase for August.

How home performed varied widely by retailer. Saks' Department Store Group, which has a positive total sales increase of 1.0 percent though its comp-store sales declined by a half of a percent, listed home among its best performers for the month.

While home placed below the company average at Dillard's, the entire home store at Elder-Beerman was among its best performers for the month.

Ross Stores also saw home as a strong performer for the month.

Pier 1 Imports was disappointed by its sales, which declined by 4.1 percent in comp stores, while total sales were up 4.9 percent. "Weekend traffic in July was down, and the expected pick-up later in the month did not materialize," said Marvin Girouard, chairman and ceo. August comp store sales are expected to be in the range of -3.0 percent to -6.0 percent, he added. "We continue to focus on merchandise margins and controlling expenses, which are critical to earnings. Throughout August, new fall merchandise will arrive in stores each week and inventories are on plan."

TOP 3
Company % chg.
Jo-Ann Stores 9.2%
Costco 8.0
Pamida 6.9
BOTTOM 3
Company % chg.
Stein Mart -6.2%
Mervyn's -5.8
Shopko stores -5.1


July sales for major retailers
Total chain sales, including all merchandise departments, for period ending 8/2/03a
Sales in $millions

Company 2003 sales 2002 sales Total % change Same-store % change
a: Reporting periods vary from store to store.
b: For the period ending Aug. 3.
c: For the period ending July 26.
d: For the period ending Aug. 1.
Costco b $3,340.0 $2,970.0 12.5 8.0
Dillard Dept. Stores 549.1 555.6 (1.2) (1.0)
Dollar General b 494.1 434.3 13.8 4.9
Elder-Beerman b 36.3 36.3 0.1 2.1
Family Dollar 359.9 314.4 14.5 4.9
Federated 963.0 969.0 (0.5) (0.4)
Gottschalks 42.0 43.2 (2.8) 0.1
Hancock Fabrics b 29.1 28.5 2.1 3.0
JCPenney c 2,210.0 2,137.0 3.4 NA
Dept. stores 932.0 913.0 2.1 3.7
Catalog/e-commerce 177.0 160.0 10.6 NA
Jo-Ann Stores 114.3 105.2 8.7 9.2
Kohl's Corp. 700.8 577.1 21.4 6.7
May Dept. Stores 863.4 825.9 4.5 1.8
Pier 1 Imports 129.6 123.6 4.9 (4.1)
Ross Stores b 303.0 269.0 12.6 2.0
Saks Inc. b 363.1 352.7 2.9 2.2
Dept. stores 220.0 217.9 1.0 (0.5)
Sears U.S. sales b 1,917.6 1,923.1 (0.3) (0.8)
ShopKo 224.6 230.2 (2.4) (2.1)
ShopKo stores 164.6 NA (5.1) (5.1)
Pamida 60.0 NA 5.7 6.9
Stein Mart 80.5 82.3 (2.2) (6.2)
Target Corp. 3,303.0 2,979.0 10.9 3.1
Target 2,871.0 NA 12.7 4.3
Mervyn's 235.0 NA (5.1) (5.8)
Marshall Field's 142.0 NA (3.8) (2.4)
TJX Cos. b 899.0 810.0 11.0 3.0
Value City 164.6 153.7 7.1 2.2
Value City Dept. stores 93.8 93.1 0.8 1.1
Wal-Mart Stores Inc. d 18,630.0 16,655.0 11.9 4.6
Wal-Mart stores 12,628.0 11,322.0 11.5 4.5
Sam's Club 2,487.0 2,288.0 8.7 5.1
26 weeks to date
Costco b NA NA NA NA
Dillard Dept. Stores $3,535.4 $3,728.9 (5.2) (5.0)
Dollar General b 3,200.0 2,800.0 14.3 4.5
Elder-Beerman b 263.6 274.7 (4.0) (3.2)
Family Dollar NA NA NA NA
Federated 6,726.0 6,939.0 (3.1) (3.1)
Gottschalks 292.6 305.4 (4.2) (1.7)
Hancock Fabrics b 203.4 196.7 3.4 4.0
JCPenney c 14,806.0 14,926.0 (0.8) NA
JCPenney stores 6,233.0 6,429.0 (3.0) (1.6)
Catalog/e-commerce 1,148.0 1,200.0 (4.3) NA
Jo-Ann Stores 734.0 726.1 1.6 2.5
Kohl's Corp. 4,326.2 3,792.4 14.1 (0.7)
May Dept. Stores 5,872.9 6,126.1 (4.1) (6.0)
Pier 1 Imports 697.8 666.0 4.8 (3.5)
Ross Stores b 1,845.0 1,697.0 8.7 (1.0)
Saks Inc. b 2,598.6 2,644.8 (1.7) (2.1)
Dept. stores 1,541.7 1,565.2 (1.5) (2.3)
Sears U.S. sales b 12,904.5 13,352.5 (3.4) (4.1)
ShopKo 1,472.6 NA (2.6) (2.4)
ShopKo stores 1,089.3 NA (4.1) (4.1)
Pamida 383.3 NA 1.8 2.6
Stein Mart 634.1 667.4 (5.0) (7.6)
Target Corp. 20,625.0 NA 7.8 0.7
Target 17,742.0 NA 9.9 1.9
Mervyn's 1,543.0 NA (7.3) (7.6)
Marshall Field's 1,095.0 NA (4.6) (3.7)
TJX Cos. b 5,898.0 5,477.0 7.7 0.0
Value City 1,193.1 1,155.0 3.3 (1.5)
Value City Dept. stores 679.4 695.7 (2.3) (1.8)
Wal-Mart Stores Inc. d 120,587.0 109,150.0 10.5 2.8
Wal-Mart stores 81,867.0 74,661.0 9.7 2.8
Sam's Clubs 16,482.0 15,323.0 7.6 3.0


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