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US apparel retailers' June 2017 sales roundup

June proved to be a difficult month for the handful of US apparel retailers still reporting their monthly comparable sales figures, despite same-store sales coming in 180 basis points ahead of consensus forecasts, as weak traffic and warmer weather saw all but one record a decline.

According to research firm Retail Metrics, June same-store sales increased 4.4% for monthly reporters coming in 180 basis points ahead of its consensus 2.6% forecast. This compared to a 0.5% rise in the same month last year and a 3% rise in May.

Retail Metrics president Ken Perkins says sales catalysts during the month were Father's Day weekend, which was expected to generate record sales according to a NRF consumer spending survey, high school graduations, and the lead in to the 4th of July holiday weekend.

Store checks throughout the month found continued soft traffic, but with no deterioration from May. However, store checks over the final weekend of June found "modest" traffic levels as hot temperatures drove most consumers to the beach or toward other recreational activities.

He adds, it is no secret retailers are struggling to generate both web and store traffic, with footfall due to remain an issue for "virtually every retailer" as consumers' transition purchases to mobile and especially to services.

Meanwhile, numerous retailers, particularly in the apparel and department store space were on sale.

Winners and losers

All but one of the apparel retailers still reporting monthly comparable store sales posted declines in June, with one booking its 24th consecutive decline.

Denim specialist The Buckle posted a 5.8% decline that exceeded Retail Metrics consensus estimate of -8.3% and represented the Nebraska-based chain's 24th consecutive negative monthly comp. It was, however, the second smallest monthly comp decline in the last 18 months. The Buckle, which operates 462 retail stores, also booked a decline in net sales, which fell 5.9% to US$73.6m for the five weeks ended 2 July from $78.3m in the year-ago period.

Meanwhile, comparable store sales for value-priced fashion and accessories retailer Cato Corporation continued on their negative trend in June. The retailer posted slightly worse than expected June comps that fell 16% year-on-year versus Retail Metrics consensus of -15%. Cato has now comped negatively for 16 straight months while racking up double-digit declines in seven of the last eight months. Net sales were down 15% to $74.7m.

CEO John Cato said: "Our negative sales trends persisted in June and the decline in sales continues to put severe pressure on merchandise margins and profitability. Second quarter and full year earnings will be significantly below last year."

L Brands, owner of the Victoria's Secret, Pink and La Senza brands, turned in a 9% June comp decline that was the low end of its (9-5%) same store sales guidance and fell short of Retail Metrics' -6.8% consensus forecast. This represents a 200 basis point sequential deterioration from the speciality apparel chain's 7% May comp decline. Net sales were down 6% to $1.2bn for the five weeks ended 2 July. The company noted the exit of both the swim and apparel businesses had a negative 7 percentage point impact on total company June same-store sales.

July comps are planned to be down mid-to-high single digits for the month with exited swim and apparel categories adversely impacting July results by 400 bp.

Speciality apparel and footwear retailer Zumiez, meanwhile, turned in a solid 5.3% year-on-year gain for the month, handily exceeding Retail Metrics' consensus estimate of +1.1%. Zumiez faced a relatively easy year ago comparison of -4.5%. Total sales also increased, up 8.4% to $72.2m, compared to $66.6m in the year-ago period. The company operates 692 stores across the US, Canada, Europe and Australia.

As a result of the better than expected June results, Zumiez raised the low end of its second-quarter 2017 earnings guidance to a loss of six to eight cents from a loss of six to eleven cents previously.

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