Retailers report tepid same-store sales

NEW YORK - Americans didn't go on many shopping sprees in June, resulting in sluggish sales for many retailers. It often took deeply discounted clothing to get shoppers to spend - and then only if they needed it.

The lackluster performance, being compared with a weak June 2009, is raising concerns about the back-to-school shopping season and the health of the economic recovery.

Of local chains based in the wide-ranging Philadelphia area that reported today, only Bon-Ton Stores Inc. reported an increase same-store revenues.

The International Council of Shopping Centers' index of June retail sales saw a 3 percent increase, the low end of its growth forecast that ranged from 3 percent to 4 percent. But that's compared with a 5.1 percent decline in the year-ago period.

The figures are based on revenue at stores open at least a year and are a key indicator of retailers' health.

June's results were inflated by a late Memorial Day weekend, which lifted results by 1 percentage point last month and deflated May by the same amount, according to Mike Niemira, chief economist at ICSC.

After ramping up spending surprisingly in the first quarter, shoppers have hunkered down since April. Some worry they'll continue to be tightfisted through the holiday shopping season.

"My sense is that the consumer is very cautious at this stage, given the state of the labor market, the housing market," said Ken Perkins, president of research firm RetailMetrics. "June sales are going to reflect that caution." A sluggish June sets up a "disappointing back-to-school season," he said. "I think [back-to-school] is going to be very promotional."

As merchants reported their results Thursday, Costco Wholesale Corp. posted a solid revenue gain, but it was fueled by its international business. Target Corp. posted a modest gain that was below Wall Street expectations. Many teen merchants, including American Eagle Outfitters Inc., the Buckle Inc., Hot Topic Inc. and the Wet Seal Inc., reported decreases in revenue.

Among the bright spots were Limited Brands Inc., which owns Victoria's Secret and Bath & Body Works. Department store operators Macy's Inc. and J.C. Penney Co. also had solid gains that were better than expected.

Uncertainty is growing as evidence mounts - from disappointing housing data to sluggish hiring - that the recovery is stalling heading into the second half of 2010. And that is when the benefits of most of the government's stimulus spending will begin to fade.

Target posted a disappointing 1.7 percent gain. Clothing, food, and health and beauty products were strong sellers. But electronics, video games, music and movies were weaker.

Among department stores, Macy's enjoyed a 6.5 percent gain in June. Penney enjoyed a 4.5 percent gain. Saks Inc., which operates Saks Fifth Avenue, rose 2.5 percent in June.

Limited Brands, which operates Victoria's Secret and Bath and Body Works, said it posted a 6 percent gain.

But preppy teen clothing company Abercrombie & Fitch Co., which has struggled with declines, posted a 9 percent increase, but it's still a long way from making up last year's 32 percent drop.

The figures cover the period from May 30 through Saturday. Wal-Mart Stores Inc., the world's largest retailer, stopped reporting monthly results last year.

Philadelphia-based Destination Maternity Corp. said that June revenue in its stores that had been open at least a year fell 2.2 percent.

That includes a 4.4 percent drop at stores but a 43.3 percent increase in online sales.

Net revenue for the month was $41 million, about the same as a year earlier.

For Destination Maternity's fiscal third quarter, revenue in stores open at least a year fell 3.3 percent and net revenue edged down less than 1 percent to $142 million from $142.5 million.

The company expects to report third-quarter net income in the top half of its earlier forecast for profit of $1.16 to $1.34 per share, even though it expects third-quarter revenue of $142 million, at the low end of its expectations.

The company said cost cuts offset a decline in revenue at stores open at least one year.

Shares were down 28 cents, to $25.09, early this afternoon.

York, Pa.-based department store operator the Bon-Ton Stores Inc. said that revenue in its stores open at least one year rose 1.4 percent in June.

Total revenue for the five weeks that ended July 3 rose about 1 percent to $244.4 million from $241.5 million last year.

Best-selling items included sportswear, dresses and underwear. The weakest-performing categories were juniors, home products and men's.

So far this year, Bon-Ton's revenue in stores open at least a year rose 1.9 percent from the same period a year earlier, and total revenue rose nearly 2 percent to $1.09 billion from $1.08 billion.

Bon-Ton operates 278 stores in the United States.

Shares were down 1 cent, to $8.96, early this afternoon.

Drugstore operator Rite Aid Corp. said last week that its total revenue and a key revenue indicator both fell in June compared with a year earlier, when consumers' worries about the swine flu outbreak boosted sales of flu shots and treatments.

At stores open at least a year, Camp Hill, Pa.-based Rite Aid said, revenue fell 2.5 percent in the four weeks that ended June 26. Pharmacy revenue from those stores dropped 3.1 percent, and prescriptions decreased by 3.7 percent. Sales of food, cosmetics, magazines, and other products fell 1.1 percent.

The company said total sales for the four-week period fell 3.3 percent to $1.91 billion from $1.97 billion in 2009.

Rite Aid ran 4,759 stores as of June 26, 63 fewer than at the end of June 2009.

In afternoon trading, Rite Aid shares gained 3 cents, to 92 cents.