Blog: Leonie BarrieLittle sign of a July retail uptick

Leonie Barrie | 10 August 2009

There was little sign of any uptick in retail spending in July, as retailers released yet another disappointing month of same-store sales results. However, while consumers continue to keep a tight hold on their purse strings, some industry observers are optimistic that a turnaround may be just around the corner.

Among those offering a glimmer of hope with rising same-store sales were off-price retailers TJX and Ross Stores, department store group Kohl’s, and fashion retailer Chico’s. And Gap Inc, Macy’s and JC Penney shrugged off falling revenues to lift their earnings estimates.

But results were still hampered by leaner inventories as retailers clear out merchandise, the shift of many back-to-school sales tax holidays into August, tough comparisons with the year-ago period, and unfavourable weather.

All eyes are now focused on the key back-to-school selling period – but the evidence so far suggests shoppers will continue to focus on discounted items and make fewer purchases.

There are more immediate concerns for US apparel giants Gap and Levi Strauss, who have both launched urgent investigations in Lesotho after a supplier in the African country was exposed for chemical dumping and pollution by a UK newspaper.
The Nien Hsing-owned factory, which produces jeans for the companies, was found to be dumping hazardous materials in landfill sites and illegally polluting river water. Images also showed children sifting through harmful materials at a rubbish tip, where Gap and Levi’s labels are scattered along the ground.

Meanwhile, Crocs has hit back at the notion that its colourful plastic shoes are a fad, and says it sees a return to profit in 2010 – despite swinging to a second quarter loss of $30.3m as sales tumbled 11.3%. The company said the results were better than expected, and the market seemed to agree, with shares rising on the back of the firm’s rising retail and internet sales, strong demand in Asia, lower inventories and the fact a $17.3m credit facility has been paid off.

There were mixed fortunes at rival sports firms Adidas and Reebok though. Widespread revenue declines sent second quarter profits at Adidas crashing by 93%, but the company is scenting an improvement in the second half of the fiscal year. While at Puma, lower operating costs and higher sales were unable to offset reduced margins, pushing net earnings down by 15.6% - prompting a gloomy outlook for the second half of the year.

Also on the sportswear front, there was good news for rugby-focused sportswear brand Canterbury of New Zealand, which has been sold to UK retailer JD Sports in a GBP6.5m (US$11m) deal. The acquisition safeguards the future of Canterbury's business in Australia and New Zealand, as well as the presence of the brand across the UK and Europe.


BLOG

Trump and Brexit generate more confusion

Over the past month, Donald Trump and his team failed to offer any clear plan to ensure Americans would "Buy American, Hire American" - while the British government's attempts to clarify the specifics...

BLOG

Bangladesh works to resolve labour activist issues

The Bangladesh government was forced to respond late last week to pressure over its crackdown on labour activists after a number of global brands and retailers, including H&M and Inditex announced pla...

BLOG

US border tax a contentious issue

Fresh from their disappointment at seeing the Trans-Pacific Partnership (TPP) free trade deal abandoned last month with an executive order by President Donald Trump, the US apparel and footwear sector...

BLOG

Primark's sustainable cotton programme takes shape

With the ultimate aim of ensuring all the cotton in its products is sourced sustainably, value clothing retailer Primark is adamant that having a business model focused on offering the lowest prices o...

just-style homepage



Forgot your password?