July sales raise concerns about back-to-school

New York City American shoppers remained wary in July, resulting in sluggish sales for many merchants. Total retail sales fell 5.1%, according to Thomson Reuters' survey of 30 major retail chains. That was worse than the negative 4.6% average for the year through July and marked the second-weakest month for retail sales in 2009, the company said.

While the economy and unemployment concerns remain important contributing factors, a number of other factors also contributed to July's dismal results, including wet and cool weather throughout much of the country, lean inventories that left fewer clearance opportunities for shoppers, and the shift of sales-tax holidays from July to August in many states also. Some analysts said the “cash for clunkers” program may have stole some momentum from retail sales.

The industry’s poor performance in July raised concern about the critical back-to-school season. ShopperTrak projected that the total foot traffic in retail stores during the coming season would fall 10% as shoppers focused on necessary purchases and targeted sales.

Mall-based apparel chains continue to be hit hardest as consumers continued to 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.

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 who 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 who did better than analysts had predicted included:

• Gap posted an 8% decline in same-store sales, slightly less than the 8.5 percent 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 Eagles, whose sales slide 11%.