Retail: Early Sales Release Thoughts for June

|
 |  Includes: AEO, ANF, ARO, BJ, BKE, CATO, COST, DEST, FRED, GPS, HOTT, JCP, JWN, SKS, WTSL
by: Retail Geeks

  • We show 10 retailers beating their consensus comp store sales expectation for June 2010. We show 11 retailers missing their consensus comp store sales expectation for June 2010. Is the separation between winners/losers beginning to become more evident? Big picture, June 2010 should have been stronger given the top-line tailwinds.
  • Looking ahead, while July 2009 was a dismal month from a top-line perspective, there were no headwinds mentioned a year ago that provide a tailwind this year. Therefore, July 2010 may take a step back versus June 2010. 2H 2010 is likely to be materially worse than consensus expectations from a top-line perspective.
  • 4 retailers explicitly suggested that comp store sales in June 2010 were below their expectations: AEO, FRED, GPS, and WTSLA.
  • We show ARO as the only other retailer explicitly reporting improved merchandise margins in June 2010 versus LY. SKS implicitly suggests improved merch margins versus LY via a “less promotional activity” comment.
  • ANF reported relatively strong sales. But, the company also reported a dramatic -16% average unit retail (AUR) decline in the month. This compares to May 2010’s -6% AUR decline. The company’s relative top-line strength came with a hit to merchandise margins.
  • Our Compology this month is measuring relative top-line strength/weakness by comparing the comp store sales results in June 2010 versus May 2010.

The following retailers reported relatively stronger comp store sales in June 2010 versus May 2010 (relative strength/improving trend):

ANF (+12.0% improvement in June 2010 versus May 2010)

JWN (+10.4% improvement in June 2010 versus May 2010)

ARO (+7.0% improvement in June 2010 versus May 2010)

HOTT (+6.9% improvement in June 2010 versus May 2010)

JCP (+6.3% improvement in June 2010 versus May 2010)

The following retailers reported relatively weaker comp store sales in June 2010 versus May 2010 (relative weakness/worsening trend):

SKS (-3.3% decline in June 2010 versus May 2010)

BJ (-3.0% decline in June 2010 versus May 2010)

CATO (-2.0% decline in June 2010 versus May 2010)

BKE (-1.9% decline in June 2010 versus May 2010)

FRED (-1.8% decline in June 2010 versus May 2010)

  • Looking Ahead by Looking Back…What happened in July 2009?

Despite the lack of fiscal stimulus overhang, comp store sales in July 2009 were worse than May/June 2009. Only 5 of 25 retailers that reported monthly comp store sales in July 2009 that were flat or positive.

No retailers other than DEST complained about weather negatively impacting sales in July 2009. Therefore, weather was likely a top-line tailwind.

Also, grocery deflation was suggested as providing a material headwind at COST and BJ during the month.

There was no discernible fiscal week relative strength/weakness in July 2009.

The Southwest and Northeast were generally held to be the strongest comp store sales regions in July 2009. The South was generally held to be the weakest comp store sales region in July 2009.

Disclosure: No positions