Shop Talk
Retailers, consumers and prices
Check Out Line: A decline in weekly sales numbers
Check out the decline in weekly U.S. same-store sales gains.
After two consecutive weeks of strong positive weekly sales gains, retailers saw their sales take a breather with a 1.5 percent decline in the week ending July 10, according to the International Council of Shopping Centers and Goldman Sachs.
Sales in the weeks ending July 3 and June 26 rose 1 percent and 2.1 percent, according to the report.
On a year-over-year basis, sales also slowed to 3.2 percent, but continued to remain positive.
“Sales showed a mixed performance over the past week as the seasonally-adjusted year-over-year pace continued to rise — although the unadjusted pace was much stronger due to the holiday-sales lift from a calendar shift when the Independence Day federal holiday was celebrated in 2010 and 2009,” ICSC chief economist Michael Niemira said in a statement.
The ICSC reaffirmed its outlook for July U.S. same-store sales to increase in the range of 3 percent to 4 percent, compared with a 5 percent decline last year.
However, U.S. retailers relied heavily on promotions to boost June sales, suggesting profit margins may suffer as they head into the key back-to-school shopping season.
The Weekly Chain Store Sales Snapshot is produced by the ICSC and Goldman to measure U.S. same-store sales, excluding restaurant and vehicle demand, and represents about 75 retail chain stores.
Meanwhile, Goldman analyst Michelle Tan said in a separate research note that there are few reasons to buy stocks in the apparel retail sector assuming a slow recovery. It cuts its 2010, 2011 and 2012 profit estimates by an average of 7 percent.
“In a slow recovery with little sequential improvement in employment, sector sales have averaged less than 2 percent with flattish margins; this implies about 9 percent risk to Street forecasts,” Tan wrote. “History suggests downside risk to estimates in a double-dip scenario is roughly two times the upside in a robust recovery.”
Also in the basket:
Dr Pepper Snapple sets new $1 bln share buyback
Calif Pizza raises Q2 profit veiw, shares up
Borders to sell stationery maker for $31 mln
Nissan says Hitachi delay may hit US, Mexico output
(Reuters photo)
Soaring gas sinks Goldman’s view of retailers
What does gas at $4.50 a gallon mean for some mall-based department stores?
A downgrade by Goldman Sachs.
Goldman sharply raised its forecast for oil prices in the second half of this year, saying it expects U.S. crude to average $141 a barrel, up from a previous projection of $107. Goldman also forecasts prices will rise further next year to average $148.
That is not good news for retailers.
“Higher energy spending in the second half is likely setting the stage for a more challenging backdrop for consumer discretionary sectors, particularly for the department store stocks,” Goldman noted.
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