Friday, July 10, 2009

Weak June Sales Leave Retailers Anxious About Back-to-School -

Weak June Sales Leave Retailers Anxious About Back-to-School -

"U.S. retailers posted steep sales declines for June as soggy weather kept shoppers home and comparisons were tougher due to federal economic-stimulus checks spent in the year-earlier period.

The poor showing this early in the summer leaves many chain stores with lots of inventory destined for the clearance rack just as the industry approaches the important back-to-school period.

'Retailers are having difficulty selling full-priced items, even in season,' said Ellen Davis, vice president of the National Retail Federation. Consumers are 'shopping at a lot of places before they pull the trigger,' she said."

The challenge for discounters appeared to be selling big-ticket items, even at reduced prices, a trend seen in earlier months. "As you peel the onion, places like Costco and Target are doing all right when it comes to commodity essentials," said Esteban Bowles, a retail consultant at the firm A.T. Kearney. "It's when you talk about discretionary spending that you see negative store sales."

Same-store sales at Target Corp. fell 6.2%, a bigger drop than the 5.6% estimate by analysts polled by Thomson Reuters. Target Chief Executive Officer Gregg Steinhafel cited a "challenging economic environment" in a statement, but said the company's gross margins and improving credit card segment seemed to be offering bright spots in the downturn.

The tally doesn't include figures from Wal-Mart Stores Inc., which recently stopped disclosing monthly sales figures.

Department stores faced continued damage, with sales down 8.5% on average. J.C. Penney Co. was down 8.2% and Kohl's Corp. same-store sales fell 5.6%, both slightly beating negative expectations. Some off-price apparel stores were able to eke out gains, with Ross Stores Inc. posting a 1% same-store sales increase and TJX Cos., the owner of TJ Maxx, reported gains of 4%.

To rebuild momentum, retailers will be counting on their back-to-school merchandise more heavily than last year, experts say. "I think you're going to see a very big marketing push," said Matthew Katz, a managing director in retailing at AlixPartners, the consultancy. "It's going to be a very fierce back-to-school period."

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