A few of CER's larger tenants reported some good results last night including TJX one of CER's largest, reported a 3% increase in June sales
Although US tenants dont pay turnover rent like the larger tenants in Australia do, having more people walk through their malls still has an indirect positive impact on the smaller retailers that operate at the malls.
http://www.cnbc.com/id/38132594
Retail Results Mixed as Consumers Hunt Bargains Published: Thursday, 8 Jul 2010 | 11:08 AM ET Text Size By: Christina Cheddar Berk News Editor DiggBuzz FacebookTwitter More Share Warm weather and sales tied to the Memorial Day and Father's Day holidays helped drive shoppers to stores in June, but the heavy discounting may have hurt retail profits.
"I think overall the consumer spending is slowing a bit," said Dana Telsey, chief information officer at Telsey Advisory Group.
"I think what we saw at the beginning of the year is a little bit slower now than the middle of the year," Telsey said. "I think overall we're seeing where there's unemployment and higher taxes....consumers, they want to pause a bit."
According to Thomson Reuters, sales were up 3.1 percent in June, just shy of the average analyst estimate of 3.2 percent. Last year, sales fell 4.9 percent in June.
Not only are retailers using discounts, but some are also using unconventional promotions to attract visitors to stores as consumers remain reticent to spend.
Still, there were many retailers that had good news to report. Department store shares are trading higher after J.C. Penney [JCP 23.24 1.46 (+6.7%) ] and Nordstrom [JWN 33.69 -0.07 (-0.21%) ] were among those retailers reporting stronger than expected sales.
Penney said sales of summer apparel were strong ahead of the Father's Day holiday.
But some apparel retailers, including the Gap [GPS 18.22 -1.5025 (-7.62%) ], saw weaker traffic at their stores. Gap reported same-store sales were flat compared with last year.
"June was a difficult month with lighter traffic than we anticipated," said Sabrina Simmons, Gap's chief financial officer. Simmons stressed the company would continue to focus on increasing sales while keeping a disciplined look on their operations.
Discipline has been an important theme in the retail sector as tight inventories have helped retailers weather lackluster consumer demand without too much of an impact on their inventory. But the latest results did wear on some retailers.
Teen retailer American Eagle [AEO 11.80 -0.46 (-3.75%) ] trimmed its forecast in the wake of its disappointing results. The retailer now expects its second-quarter earnings to be at the low end of its forecast, which called for adjusted earnings of between 12 cents and 16 cents a share. On average, analysts were expecting the company to earn 15 cents a share on an adjusted basis.
Despite the weakness from Gap and American Eagle, other apparel chains were among those posting the biggest gains. These included Limited [LTD 24.21 0.53 (+2.24%) ], Abercrombie & Fitch [ANF 35.45 2.55 (+7.75%) ], Hot Topic [HOTT 5.30 0.46 (+9.5%) ] and Zumiez [ZUMZ 17.86 0.60 (+3.48%) ].
"The retailers that are doing best are the ones that had less inventory," said Eric Beeder, of Brean Murray, Carrett & Co. "We have a consumer who is really still not shopping, but when they are shopping, they're splurging. And for people who had less inventory, you had better sell through and better margains."
The companies with excess inventory, however, were forced to slash prices on their products, Beeder said. "We're at that point right now where you have to look at individual companies," he said.
Warehouse club store Costco [COST 55.71 1.42 (+2.62%) ] said its sales were hurt by a shift in the Memorial Day holiday, but some analysts speculate its prices may be under pressure from discounting at Wal-Mart Stores [WMT 49.18 0.26 (+0.53%) ]. Wal-mart has been slashing prices aggressively for products such as soft drinks. But sales from the world's largest retailer were not available, as it no longer reports sales on a monthly basis.
Target [TGT 50.02 -0.41 (-0.81%) ] also posted a disappointing month. Sales at the discounter rose 1.7 percent compared with a 2.7 percent gain that analysts had expected.
"Sales in electronics, video games, music and movies were particularly soft for the month," said Target Chief Executive Gregg Steinhafel. "We continue to plan our business cautiously." Target said it expects July same-store sales to be up in the low-single digits.
Wall Street Strategies analyst Brian Sozzi said watching consumer spending patterns during the key holidays in June are helpful in determining how spending will shape up for the back-to-school shopping season, which is the second biggest spending occasion after the Christmas holiday season.
"In many respects, the sales were not there," Sozzi said. He also said he is beginning to see a divergence among consumers with some trading down from discounters such as Wal-Mart and Target to dollar stores and to Fred's [FRED 10.72 0.08 (+0.75%) ], a discounter that sells a lot of private-label goods.
To see estimates and results for June's retail sales, see the table below:
June Same-Store Sales Retailers June 2010 Estimates June 2010 Actual Costco Wholesale (excluding gas) 3.6% 3% BJ Wholesale (excluding gas) 4.4% 3.2% Target 2.7% 1.7% JC Penney 3.4% 4.5% Kohl's Department Store 6.5% 5.9% Dillards Department Store (1.0%) 2% JW Nordstrom 9.6% 14.1% Saks Department Store 2.0% 2.5% Stage Stores 2.0% (1.2%) Macy's 6.1% 6.5% Gap 3.4% Flat TJX 4.2% 3% Limited 3.2% 6% Ross Stores 5.1% 5% Stein Mart (2.0%) 0.6% Abercrombie 2.8% 9% American Eagle 2.0% (1%) Aeropostale 7.3% 8% Hot Topic (5.4%) (2.1%) Wet Seal (1.8%) (3.6%) The Buckle (0.1%) (7.3%) Zumiez 8.5% 10.9% Walgreen 1.1% 2% Rite Aid (0.9%) (2.5%) Source: Thomson Reuters; company reports. Figures in parenthesis are losses.
CER Price at posting:
16.5¢ Sentiment: Buy Disclosure: Held
