All but one of the apparel retailers still reporting monthly comparable store sales posted declines in July

All but one of the apparel retailers still reporting monthly comparable store sales posted declines in July

July was another difficult month for the handful of US apparel retailers still reporting their monthly comparable sales figures, with same-store sales coming in ahead of expectations but consumer spending softening going into the key back-to-school shopping season.

According to research firm Retail Metrics, July same-store sales increased 4.8% for monthly reporters, versus expectations for a 3.9% gain. This compares to a 2% drop in the same month last year and a 4.4% rise in June.

Retail Metrics president Ken Perkins says the "tectonic retail plates" continue to shift as the industry gets "hammered" by disruptors, changing consumer spending habits and channels, weak sales and earnings growth. He adds retail managements are struggling to grow their top line and increasingly finding themselves susceptible to private equity overtures and activist investors.

July weather has generally been cooler than normal across much of the country, while promotional levels remain somewhat elevated but appear to be more controlled and inventories are generally in better shape this year relative to last.

Based on store checks over the last weekend, Perkins says traffic looks to have tailed off from earlier in the month, as consumer spending softens going into the key back-to-school shopping season.

Winners and losers

All but one of the apparel retailers still reporting monthly comparable store sales posted declines in July – with one booking its 25th consecutive monthly decline.

This was Nebraska-based denim specialist The Buckle, which posted an 8.4% decline in comps. It also booked a decline in net sales, which fell 9% to US$60.6m for the four weeks ended 30 July from $66.5m in the year-ago period.

Meanwhile, comparable store sales for value-priced fashion and accessories retailer Cato Corporation continued on their negative trend in July. The retailer posted a better than expected comp decline of 9% versus Retail Metrics consensus of -15%. Cato has now comped negatively for 17 straight months while racking up double-digit declines in seven of the last nine months. Net sales were down 8% to $61.2m.

"The decline in sales continues to put severe pressure on merchandise margins and profitability," said CEO John Cato. "We expect a loss for the second quarter and full year earnings to be significantly below last year."

L Brands, owner of the Victoria's Secret, Pink and La Senza brands, turned in a 7% July comp decline that was worse than its 6-4% same store sales guidance. This represents a 200 basis point sequential improvement from the speciality apparel chain's 9% June comp decline. Net sales were down to $767.7m compared to $777m in the year-ago period. The company noted the exit of both the swim and apparel businesses had a negative 4 percentage point impact on total company comparable sales during the month.

Speciality apparel and footwear retailer Zumiez, meanwhile, turned in a better than expected 5.1% July comp gain for the month. Zumiez faced a relatively easy year ago comparison of -2.9%. The company noted that men's, juniors, and footwear all comped positive, while hard goods and accessories comped negatively. Total sales also increased, up 8.9% to $67.5m, compared to $61.9m in the year-ago period. The company operates 692 stores across the US, Canada, Europe and Australia.