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July Same-Store Sales Come in "Tepid"

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In results analysts called tepid same-store sales rose in July by about 3 percent.

"We are now in an environment where the dollars in consumers' pockets are fewer, so the competition for those dollars has increased," said Lawrence Creatura, portfolio manager at Federated Clover Investment Advisors.

U.S. consumer sentiment hit its lowest level in nine months in July on bleak prospects for jobs and income, according to Thomson Reuters/University of Michigan's Surveys of Consumers. On Thursday, the government reported that new U.S. claims for unemployment benefits unexpectedly rose in the latest week.

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July was the 11th straight month of improving sales, compared with a year-earlier drop of 5.1 percent, according to Thomson Reuters data.

But analysts have also noted that year-earlier comparisons will get tougher in the fall and the key holiday selling season.

Retail Metrics said sales rose 3.0 percent while Kantar Retail recorded the gain as 2.9 percent and ICSC estimated that sales rose 2.8 percent.

ICSC's tally shows that same-store sales rose 2.8 percent in July.

ICSC's numbers are based on 31 retailers. It had been expecting sales to rise between 3 percent and 4 percent.

Here are ICSC's monthly same-store sales year-over-year changes, not seasonally adjusted, going back to 1993.

(Click for larger image.)

icsc-july-2010-ss

Here is ICSC's index of same-store sales, seasonally adjusted, going back to 1992.

(Click for larger image.)

icsc-july-2010-index

According to Kantar Retail, sales-weighted same-store sales excluding Walmart increased 2.9 percent in March for the 31 retailers that reported numbers. (A pdf with each retailer's results can be downloaded here.)

Frank Badillo, senior economist at Retail Forward, said in a statement, “Retail sales growth appears to be leveling off at a modest pace as it moderates from a spring surge fed by economic stimulus and pent up demand. But the results are uneven among retailers, which reflects tough price competition in certain channels and diverging spending intentions among upper and lower income shoppers.”

Retail Metrics, meanwhile, reported that same-store sales increased 3.0 percent.

It listed eight key factors that influenced the month's results.

  1. 1. Hot weather a net positive for July sales aiding clearance
  2. 2. July 4th holiday shift into July from June last year a net positive for month
  3. 3. Retailers face easiest YOY comparison of -4.7% they will be up against for at least the next year
  4. 4. Back-to-School floor sets were a modest catalyst for sales toward the end of the month as the bulk of B2S will occur in August
  5. 5. Promotional cadence coming out of June into July was higher as retailers are fully aware of soft patch economy is in
  6. 6. Europe is faring better post-stress tests and odds of double dip look to be diminishing again
  7. 7. Housing is still a major negative for consumers with prices stagnant and millions still underwater
  8. 8. Labor market is better but still very fragile and a net drag for retailers and the biggest impediment to higher levels of spending

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Elaine Misonzhnik

Senior associate editor Elaine Misonzhnik has been writing for National Real Estate Investor since June 2006 and has covered commercial real estate for more than 12 years. She first became...
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