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Retail Sales Softened In July

8/08/2002 02:06:00 PM Eastern

New York - Blame it on the stagnant economy, the sinking stock market, the summer heat or the absence of last year's rebate checks, but any way you slice it retail sales hit a snag in July as CE specialists and general merchants reported disappointing revenue.

The biggest bombshell came from Best Buy, which was forced to slash its second quarter earnings outlook by nearly half due to unexpectedly sluggish sales last month, attributable, it said, to declines in consumer confidence.

'Comparable store sales softened significantly in July, finishing the month essentially flat,' said vice chairman/CEO Brad Anderson. The company, which will report its second quarter sales on Sept. 5, is 'closely monitoring sales and inventories, and identifying ways to pare expenses in the second half,' he said.

The news sent shares of Best Buy tumbling nearly 40 percent following the announcement today, and took much of the CE retail sector down with it. Among the hardest hit: Ultimate Electronics, whose stock fell 38 percent despite reporting a 21 percent gain in second quarter revenue to $142.8 million. Comp sales, however, were soft at 1-percent growth. Even though the quarter fell short of expectations, said CEO Ed McEntire, Ultimate was 'satisfied' with the positive comps given the 'current state of the economy.'

President/COO Dave Workman pointed to DBS as a key category that came up short, due to fewer industry promotions, although plasma TVs grew 360 percent and LCD sales soared 600 percent in units and dollars during the quarter.

Among full line merchants, 'solid increases in appliances' - as reported by chairman/CEO Alan Lacy - couldn't pull Sears' July sales out of the minus column. Revenue slipped 2.7 percent to $2 billion while comps fell 4.9 percent. Lacy said the declines were anticipated, as the current quarter 'is the period of greatest disruption at the store level from the implementation of our strategic initiatives.'

Wal-Mart also felt the July heat. Despite posting a 12.1-percent sales hike to $11.3 billion and a 5 percent gain in comps at its discount stores, total comp sales came in below earlier company estimates. Similarly, while Target Corp. missed its revenue targets for July, its eponymous discount stores enjoyed sales gains of 11.8 percent to $2.5 billion and comp growth of 2.2 percent.

Among the warehouse clubs, Sam's Club sales grew 7.3 percent in July to $2.3 billion as comps climbed 1.9 percent; Costco sales grew 10 percent to $3 billion while comps rose 6 percent; and BJ's Wholesale Club saw sales rise 12.6 percent to $415 million with comp gains of 1.5 percent last month.