Retail Sales Warm A Bit In June

NEW YORK— Retail sales generally improved in June, with full-line discounters enjoying modest gains, while A/V specialist Tweeter Home Entertainment Group and majap leader Sears moderated their declines.

For some, the recovery came without the usual seasonal assist from room air conditioners, demand for which had dropped with last month's unusually cool, wet weather.

Tweeter, which reported for its fiscal third quarter, saw a 3 percent drop in total revenue, reaching $170 million, compared with $175 million in the year-ago period. Comp-store sales were off 10 percent for the three months, ended June 30.

Tweeter had previously announced expectations of comp-store sales between negative 6 percent and negative 10 percent.

Excluding Florida and Arizona — and the Sound Advice chain — comp-store sales showed improvement as the third quarter progressed. Comp-store sales were down 11 percent in April, down 9 percent in May and off 4 percent in June, for a quarter comp of down 8 percent.

President/CEO Jeff Stone attributed the improvements to a switch from radio to print advertising.

Tweeter didn't break out results for the Florida and Arizona markets, which account for about 25 percent of total revenue, although Stone described it as a "sharp decline," and retail analyst Dan Wewer of CIBC World Markets estimated it to be down 20 percent.

Stone blamed the downturn on reduced promotional activity and print advertising in order to more closely match Tweeter's national strategy. Nevertheless, gross margins in those markets improved by about 140 basis points in June, compared with the same three months in 2002, he said.

"We clearly need to evolve the strategy we employ in these markets, as we actually hurt sales with some of these changes," Stone said. Those regions aside, he added, "We believe that the initial results from the change in marketing strategy are largely successful."

Among mass merchants, Sears said total sales slipped 1.2 percent to $2.6 billion for the five weeks ended July 5 and comparable store sales dipped 1.8 percent. Despite the milder across-the-board decline, sales of major appliances were down in the mid-single digits while its consumer electronics business was down in the low-double digits.

Sears attributed the majaps drop to frosty sales of room air conditioners, due to the unusually cool spring in much of the country. The company has also yet to announce a new chief CE merchant following the reassignment of the category's former VP/general manager Ray Brown in April, who continues to wear both hats.

Within the discount crowd, Wal-Mart's flagship stores enjoyed a 9.5 percent sales hike for the five weeks ended July 4, to $16.7 billion, while same-store sales crept up 2.4 percent compared to an 8.7 percent gain during the year-ago period. Unlike Sears, the company said warmer mid-month weather helped move seasonal items including room air conditioners.

Target also had a good June, with its namesake stores pulling in $3.6 billion for the five weeks ended July 5 — a 10.4 percent gain — and matching Wal-Mart's 2.4 percent comps.

Among the wholesale clubs, Costco's net sales climbed 11 percent to $4.3 billion for the five weeks ended July 6, and its same-store sales grew 5 percent domestically. The company said the computer, A/V and white goods categories — which represent the highest sales volume within its hardlines business — enjoyed mid-single digit gains, and are "showing improvement over recent months."

Meanwhile, June sales at Wal-Mart's Sam's Club unit grew 8 percent to $3.4 billion with comps of 4.1 percent, while BJ's Wholesale Club reported a 13.9-percent sales gain for the month to $658.7 million. Comps grew 6 percent despite weaker sales of room air conditioners, film and batteries.

Elsewhere, novelty CE seller Sharper Image said total revenue grew 28 percent in June to $42.2 million, led by a 55-percent spike in online sales, while comp-store sales grew 15 percent. Founder/ chairman Richard Thalheimer said the company "enjoyed great consumer response" to its assortment of branded digital cameras and its first DVD player, a proprietary model called the Personal Entertainment Center.