Retail sales in July continued to be a mixture of disappointment and mediocrity.
Retailers catering to teens saw a mixed bag of results as teens decided to spend more money at Aeropostale (same store sales up 6%) and Buckle (same store sales up 2.8%), but both retailers missed analysts projections. American Eagle saw an 11% drop in same store sales, on top of the 7% drop they saw this time last year. Abercrombie & Fitch continued their terminal velocity fall with a 28% drop in same store sales. No good.
Macy’s saw a 10.7% drop in same store sales, JCPenney reported a 12.3% drop in same store sales, while Kohl’s managed to eek out a nearly flat month (0.4% increase in same store sales). I guess shoppers are really going nuts over that new line by Avirl Lavigne.
Besides the general state of the economy and unemployment through the course of the year, some analysts suggest that the, recently enacted and more recently refueled, Cash for Clunkers program is diverting money from the retail industry:
“One of the unintended negative side effects of the cash for clunkers program was that it’s going to remove money that probably would have been spent in retail stores and restaurants and is now going to go toward a car payment,” said Purdue Consumer Sciences Professor Dr. Richard Feinberg.
And not just “spare change.”
Feinberg estimates the nation’s retailers could lose up to $300 million a month as consumers spend their disposable income on loans instead of lunch. By the end of what’s expected to be another tough holiday shopping season, losses could add up to between $1.5 billion and $2.5 billion, Feinberg says.
More information on retail sales from the New York Times and Los Angeles Times.
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Good news for the sometimes troubled retailer:
The Boscov’s department store chain will receive a $43.7 million federal loan through a Department of Housing and Urban Development program for economic development, U.S. Sens. Arlen Specter and Bob Casey announced today.
The 20-year loan is intended to assure the Exeter, Berks County-based department store chain continues to operate. The chain employs about 5,000 workers in Pennsylvania.
More on this from the Morning Call.
This is great news for the regional retailer who, I’m sure, can use the infusion of cash. It is also very good news for mall owners throughout the Mid-Atlantic who cannot afford any more vacant square footage in their anchor units.
I do have to say that I’m somewhat surprised at the fact that Boscov’s was able to secure a loan. With other industries receiving assistance from the government, I guess it was only a matter of time before retailers saw the same type of consideration. Is anyone aware of other retailers who have secure loans from the government to assist them through the turbulent retail economy?
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Another reduction in the retail workforce: this time it is Macy’s announcing a 4% reduction in their workforce, slashing 7,000 jobs. 5,100 of those are at the store level.
“Reducing our workforce is an unfortunate outcome of the current economic environment, and I am frustrated that so many of our people will be unable to move forward with us as we proceed into a very exciting future for Macy’s and Bloomingdale’s,” Macy’s CEO Terry Lundgren said in a statement.
The retailer estimates the restructuring efforts will reduce previously planned expenses by about $400 million a year beginning in 2010.
This is the latest in a line of retail layoffs – last week Home Depot, Starbucks, Williams-Sonoma, and Target all announced layoffs. Best Buy has also announced that they will be cutting workforce in their corporate headquarters later this month.
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Wednesday
December 3, 2008
Chris Churchill, of the Times Union newspaper in Albany, NY, has a good look into the expansion plans of drug stores like Walgreens, CVS, and Rite-Aid in the New York region: Sick economy, healthy business. Despite the downturn in the economy, drug stores have not completely cut out their expansion plans and are still opening new locations at a solid rate.
And despite the recession, the proliferation continues. Other retailers, shaken by falling sales, are limiting expansions — but nearly every planning board agenda, it seems, contains a drugstore proposal.
The retail economy is ill. But drugstores seem healthy.
“We’re not immune from what’s going on in the economy, but we’re better insulated,” said Michael DeAngelis, spokesman for Rhode Island-based CVS Caremark Corp. “People are still getting their prescriptions filled. They’re still getting sick.”
I think there are a lot of people in the industry, myself included, who spend a lot of time looking at the big picture – national plans and trends of retailers – that we overlook the unique impact that every retailer has on the different locales that they serve. I like articles like this that examine the localized plans of retailers.
Also to note and put out there as a disclaimer, that Chris reached out to me for my thoughts on these retailers expansion plans. I am quoted about midway down the first page of the article. Thanks to him for allowing me to share some of my thoughts with him.
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Tuesday
November 18, 2008
comScore has released their October 2008 US retail e-commerce sales estimates. The verdict? Sales were weak – only up 1% over October 2007, which is the softest increase since comScore started tracking US retail e-commerce sales in 2001.
For households making less than $50,000, sales were down 3% for the past three months, compared to the same time period last year. Households with incomes over $100,000 saw a 14% growth in the same time period.
The economy is hitting everyone hard right now and it appears that no retailer, online or live, is immune at this point.
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