Generally, comp sales results were +200 to +300 Bps greater in June 2011, versus May 2011. That did not prevent some companies such as Target (TGT) from taking credit for their modest +170 Bps improvement in June 2011, versus May 2011.
While sales were generally stronger than management’s prior expectations, clearly merchandise margins suffered. Very few companies raised their EPS expectations above the original range.
TGT suggested that comp store sales performance around the country was consistent (almost no regional variation). Large states (CA, FL, TX) were almost universally cited as stronger comp store sales performers.
Shoes were specifically mentioned as a weaker relative performer at Kohls (KSS) (athletics the culprit) and TGT. Has the category run its course (no pun intended)?
What happened to e-commerce sales? Macy's (M) continued to report robust sales growth via its web business (+45.0% versus last year). But, Victoria’s Secret (-2%) and The Wet Seal (WTSLA) (-17%) both suggested that sales declined versus last year (LY) to “protect margins.” Hmmm.
A couple of companies suggested that sales softened in the second half of fiscal June 2011, Cato Corp. (CATO) and Fred's Inc. (FRED). The worst fiscal week at The Gap (GPS) was week #4 and the worst fiscal week at Zumiez Inc. (ZUMZ) was week #5.
Conversely, Bon-Ton Stores (BONT) suggested that it “finished strong with the arrival of more seasonal weather.”
Bebe Stores (BEBE) reported comp store sales of +7.0% for Q4. Yet, the company’s EBIT margin likely declined versus the prior year. In Q4, the company’s AUR declined -6% versus a -5% decline last year. Despite a more aggressive promotional cadence, store traffic (actual ‘bodies’ counted via store traffic counters) only increased +1% versus a -4% decline last year.
Costco Wholesale (COST) again reported relatively strong Television and Computer category sales versus LY. That said, the remainder of the Majors category continues to greatly underperform (audio, cameras, navigation).
Food/Sundry inflation at COST increased from +3% in May 2011, to +MSD in June 2011. Fresh Foods inflation at COST increased from “+LSD to +MSD” to +MSD in June 2011.
J.C. Penney (JCP) was a train wreck waiting to happen. How the company plans on delivering north of $2.00 EPS this year is beyond us. We were at $0.08 in Q2 2011, and $1.81 in FY 2011, prior to today’s announcement and are likely to end up in the $1.70 range for the year.
Our Compology this month is measuring relative top-line strength/weakness by comparing June 2011’s 2-year comp store sales results (i.e. add June 2010 + June 2011).
Looking Ahead by Looking Back… What happened in July 2010?
Overall, comp store sales in July 2010 were mixed as teen retailers generally underperformed. American Eagle (AEO), Aeropostale (ARO), Gap (GPS), Hot Topic (HOTT), and J.C. Penney (JCP) each lowered Q2 2010 EPS guidance.
Beginning in July 2010, many retailers began to complain about a “highly promotional environment.” Specifically, July 2010 was the month that ARO disclosed that it noticed a “change in the retail environment.”
In July 2010, the strongest category performance was in dresses, shoes, jewelry, and handbags. Weak categories included televisions.
Week #1 was generally considered to be the strongest fiscal week in July 2010 (via favorable calendar shift). Week #4 was generally held to be the weakest fiscal week in July 2010.
The Midwest and Southeast were generally held to be the strongest comp store sales regions in July 2010. The West was generally held to be the weakest comp store sales region in July 2010.
COST disclosed that the average retail price per gallon of gas in July 2010 was $2.79 (+12% versus $2.49 in July 2009).