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Apparel retailers struggle in July

8/6/2009

New York City American shoppers remained wary in July, resulting in sluggish sales for many merchants and raising concern about the back-to-school shopping season’s health. Mall-based apparel chains continue to be hit hardest as consumers focus on necessities and rein in discretionary spending. Still, while overall industry sales were sluggish, some retailers reported sales declines for July that were not as steep as expected.

Anumber of special factors cut into July’s sales results, including wet and cool weather throughout much of the country, and lean inventories, which left fewer clearance opportunities for shoppers. The shift of the sales-tax holidays from July to August in many states also stole momentum from July.

Two of the industry’s hottest recession performers, Aeropostale and The Buckle, recorded positive same-store sales for July, but the results fell short of analysts’ projections. At Aeropostale, same-store sales rose 6%, compared to estimates of 9.8%. Total sales in the four-week period ending Aug. 1 increased 13% to $157 million.

The Buckle’s same-store sales rose 2.8% in July, far short of analysts who had predicted a 10% rise.

 

Retailers that outdid analysts’ projections included Limited Brands, where same-store sales fell 7% in July, a smaller drop than analysts expected. For the fiscal second quarter ended Aug. 1, same-store sales fell 9% while total sales fell 10% to $2.07 billion from $2.28 billion a year ago.

Other apparel retailers that did better than analysts had predicted included:

 

• Gap posted an 8% decline in same-store sales, slightly less than the 8.5% drop expected.

 

• The Children's Place Retail Stores’ same-store sales fell 4% in July, a slightly smaller drop than analysts predicted. For the second quarter ended Aug. 1, same-store sales fell 9% while total sales fell 7% to $315.6 million. Year to date, same-store sales fell 3%.

 

• The Gymboree Corp. said Thursday that July same-store sales fell 1%, while total sales rose 5% to $212.3 million from $202.8 million a year ago. The company raised its second-quarter guidance above Wall Street expectations.

 

• Zumiez posted a narrower-than-expected 16.8% drop in July same-store sales.

 

• Chico’s FAS said Thursday that its second-quarter same-store sales rose 1.3%. For the 13 weeks that ended Aug. 1, Chico's total sales rose 3.6% to $419.9 million from $405.2 million a year earlier.

 

Among the industry’s worse performers was Abercrombie & Fitch Co., whose same-store sales fell 28% in July. The biggest drop was recorded by the company’s more affordable brand, Hollister, where same-store sales slid 32%.

 

Abercrombie’s net sales for the month ended Aug. 1 fell 22% to $236 million. Year-to-date, sales fell 23% to $1.26 billion.

 

Other apparel retailers whose July same-store results were worse than analysts had expected included Wet Seal, which reported a 12.1% drop, and American Eagle, whose sales slide 11%.

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