Your browser is out-of-date!

Update your browser to view this website correctly. Update my browser now

×

July CE Sales Slump For Discount Chains

New York – Summer’s
dog days came early for national discount chains, which reported a drop in July
sales led by CE and other discretionary categories.

At Target, net
retail sales slipped 3.2 percent to $4.4 billion for the four weeks, ended Aug.
1, while comp-store sales fell 6.5 percent.

The company said
CE sales performance trailed the monthly average for all merchandise
categories, and attributed the net revenue declines to fewer purchases and a
decrease in average transaction size.

“While our sales
remain challenging, we continue to experience favorable gross margin
performance within categories and disciplined expense control in our retail
segment,” said Target chairman, president and CEO Gregg Steinhafel.

At Costco, net
sales for the four weeks, ended Aug. 2, fell 5 percent to $5.4 billion and U.S.
comp-store sales dropped 8 percent, due largely to the impact of lower gasoline
prices.

Comp sales for Costco’s
combined CE and appliance category fell by the mid-single digits, due largely
to “much lower” average selling prices for TVs. In contrast, TV sales were up
32 percent in units, the company said, joined by strong unit volume gains in
computers and room air. CE laggards included the imaging and navigation
categories.

At BJ’s Wholesale
Club, net sales fell 6.3 percent to $722.5 million for the four weeks, ended
Aug. 1. Comp sales fell by 9.1 percent, but rose nearly 2 percent excluding the
impact of gasoline deflation.

BJ’s cited CE and
room air among its weakest performing categories in July.

Separately, Conn’s,
the multiregional CE, appliance and furniture chain, said net sales slipped 0.2
percent to $190.3 million for its second fiscal quarter ended July 31, while
comparable store sales fell 5.2 percent, as brisk sales of flat panel TVs and
modest gains in major appliances helped offset declines in extended warranties,
camcorders, desktop computers, gaming and other categories.

According to
market research firm and consultancy Retail Forward, the soft July sales
figures reflect continued cautiousness by consumers, although indicators point
to a slight loosening of their purse strings.

“Shoppers are not
yet ready to spend freely,” said senior economist Frank Badillo, “but the
results reported by retailers provide some signs that shoppers are easing up on
their cutbacks. And that’s especially encouraging given the variety of factors
weighing on retail sales in July.”

According to
Badillo, retailers said those factors included:

  • a year-ago
    comparison period boosted by economic stimulus payments;
  • the shift by some
    states of a tax holiday period into August;
  • lean inventories
    requiring less clearance;
  • fewer promotions;
  • a later start to
    back-to-school shopping; and
  • unfavorable
    weather.

The handful of
retailers reporting better results in July may have been helped somewhat by an
improvement over time in shoppers’ spending plans. According to the results of Retail
Forward’s July ShopperScape survey, the percentage of shoppers that plan to
spend less in the coming month has trended lower in a see-saw manner since
peaking at 55 percent in January. That percentage declined to 47 percent in
July.

In contrast, the
percentage of shoppers that plan to spend the same in the coming month has
trended higher in a see-saw manner since hitting bottom at 36 percent in
January. That percentage increased to 44 percent in July.

The monthly
results appear to be both helped by positive trends in household investments
and hurt by negative trends in household income, resulting in a mixed impact
from shoppers’ perception of their financial health. According to the survey, the
percentage of households that perceive they are better off compared with last
year with regard to their household investments has trended higher since April.
That percentage increased to 12 percent in July.

In contrast, the
percentage of households that perceive they are better off compared with last
year with regard to their household income has trended lower since April. That
percentage declined to 23 percent in July.

What’s more, restrained
plans for back-to-school spending, which has come to include computers, mean
there will be no significant improvement in retail sales in the coming weeks, Retail
Forward said. According to the ShopperScape survey, nearly one of every four
back-to-school shoppers (24 percent) plans to spend less on back-to-school
merchandise this year, an increase from less than one of every five shoppers
(19 percent) that planned to spend less a year ago at this time.

Nearly one of
every four back-to-school shoppers (24 percent) plans to spend more on
back-to-school merchandise this year, the survey showed. That’s down from one
of every three shoppers (33 percent) that planned to spend more a year ago at
this time.

Like other
household spending this year, spending on back-to-school will be hurt by
shoppers that are focused on sales items and intent on limiting purchases, the
survey suggested.

Featured

Close