By Anna Prior
After a cold start to the year, retailers began to thaw in May
as promotions and warmer temperatures later in the month helped
buoy sales.
The month was marked by discounts as retailers sought to clear
out spring and early summer merchandise that failed to inspire
customers during a colder-than-usual March and April.
"Back-to-school and fall shipments are on their way to stores
soon so retailers had to look at inventory closely and be
promotional," said Joel Bines, co-head of the retail practice at
consultancy AlixPartners.
While the discounting in May could pressure second-quarter
margins, retailers have been working to rein in merchandise
costs.
"Some retailers have really worked to keep costs in line
year-over-year, so even though the promotional activity was higher,
you might not see as much margin deterioration" for some retailers,
said BlueFin Research Partners retail and apparel analyst Rebecca
Duval.
Costco Wholesale Corp. (COST) posted 5% growth in May same-store
sales, excluding gas, in-line with the 5% rise the company posted
for the year-ago period. Top performing regions include Texas, the
Southeast and the Midwest, said the company. By category, softlines
recorded growth in the low double-digit percentage range, with the
strongest results in the category coming from items including small
appliances, jewelry, housewares and apparel. The hardware, garden,
tires, office and consumer-electronics categories also reported
growth.
L Brands Inc. (LTD), formerly Limited Brands, posted a 3% rise
in same-store sales last month, slightly below expectations for
3.2% growth. The company said that merchandise margin rates were
down compared to last year.
Of L Brands' units, Victoria's Secret reported a 4% rise in
same-store sales, above expectations for a 2.8% increase. The
company said the growth in same-store sales was driven by the
brand's young-women-focused Pink segment. Meanwhile, Bath &
Body Works recorded 3% growth in same-store sales, in-line with
expectations, and reported strength in its signature collection,
home fragrance, soap and sanitizer businesses. And La Senza
reported a 4% rise in same-store sales for the month, when 2.7%
growth was expected.
The nine retailers tracked by Thomson Reuters, down from 11
retailers in April as Ross Stores Inc. (ROST) and TJX Cos. (TJX)
stopped reporting monthly sales, are expected to show 4.7% growth
in same-store sales, or sales at stores open more than year. This
compares with 3.8% a year ago.
While monthly same-store sales reports give investors a small
window into how a specific company is faring, the dwindling number
of retailers that report monthly results has made it harder to get
a clear picture of the industry as a whole.
"It's just not representative of the industry at large," said
AlixPartners' Mr. Bines, noting that the small sample size means
operational issues at just one company could skew the overall
results.
Fred's Inc. (FRED) reported a 0.5% drop in May same-store sales,
when a 0.8% decline was expected. The company said that results
were "consistent" with the outlook provided in its first-quarter
report. Cool and wet weather had a negative impact on lawn and
garden merchandise, summer toys, and other seasonal departments,
said Chief Executive Bruce A. Efird, noting though that May results
"provide an encouraging start to the second quarter."
Zumiez Inc. (ZUMZ) posted a 1.1% rise in same-store sales, below
expectations for 2.3% growth. Footwear and juniors showed growth,
while accessories, men's and boys' posted declines. Zumiez said
that the amount customers spent per transaction increased, but that
was because customers were buying more items. The average price per
item, however, decreased.
Fellow teen retailer Buckle Inc. (BKE) reported a 4.1% rise in
same-store sales, topping expectations for 3.3% growth. Strong
categories for men included denim, knit shirts, active apparel and
accessories, while strong categories for the women's business
included woven tops, active apparel, dresses, accessories and
footwear. Both the men's and women's business saw price points fall
slightly, though the average amount customers spent for each
transaction increased 2%.
Gap Inc. (GPS) is slated to report May sales after the market
closes Thursday.
Write to Anna Prior at anna.prior@dowjones.com
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