Hot weather coupled with stagnant wage growth hurt apparel retail sales

Hot weather coupled with stagnant wage growth hurt apparel retail sales

July proved to be a difficult month for the apparel chains reporting monthly sales, with several hurt by tax holiday shifts in some southern states into August from July last year. As a result, retailers are not heading into the key back-to-school selling season with much momentum.

According to first figures from Retail Metrics, comparable store sales for the US retail sector as a whole climbed just 0.3% in July.

Retail Metrics president Ken Perkins said hot weather across much of the country coupled with stagnant wage growth, a lack of buzz around "must have" back-to-school items, declining consumer confidence in July, and shoppers increased willingness to pay down debt and save likely led to another soft month in retail sales.

Winners and losers

The majority of apparel retailers reporting monthly comparable store sales saw declines in July, with L Brands and Stein Mart two of retail’s stand-out performers. L Brands 3% rise, in particular, beat Retail Metrics consensus by 110 basis points.

Stein Mart reported a decent July comp gain, but it fell just short of expectations, adversely impacted by the shift in sales tax holiday’s in eight southern states from July to early August.

Cato chairman, president and CEO John Cato said the group’s July same-store sales were slightly below its current trend of flat.

Lower down the scale were Zumiez and The Buckle, which both reported declines in comparable store sales.

And Gap saw comparable store sales fall 7% at its namesake brand. Banana Republic also booked a decline, while Old Navy posted a gain. CFO Sabrina Simmons said the company continues to make "progress against previously announced strategic actions at Gap brand".

Perkins described Zumiez’s 7.6% same store sales decline, which missed expectations for a fifth consecutive month, as "disappointing".

July sales overview

Action sportswear and footwear retailer Zumiez posted a fall in comparable store sales of 7.6% for the four weeks ended 1 August. Total net sales were also down, falling 2.3% to $61.4m from $62.8m in the year ago period for the company which operates 627 stores.

At denim specialist The Buckle, comparable store sales, for stores open at least one year, dropped 8.1%. The company, which operates 463 stores, said net sales tumbled 6.7% to $73.7m for the month ended 2 August.

Value-priced fashion retailer Cato reported a fall of 1% in comparable store sales for July. The owner of the Cato, Versona and It's Fashion brands said net sales were up 2% to $66.9m from $65.3m in the prior year period.

L Brands, which owns the Victoria's Secret, Pink and La Senza brands, saw net sales climb 3% to $759.5m for the four weeks ended 1 August. Comparable store sales also grew 3% for July.

Off-price fashion retailer Stein Mart booked a 0.2% rise in July comparable store sales. Net sales were up 1.8% to $76.6m for the company which operates 270 stores.

And clothing giant Gap saw July comparable sales drop 3%, hurt by a 7% decline at its namesake brand. The company, which operates 3,300 stores, said net sales fell 2% in its second-quarter to $3.90bn.