Luxury Weathers July '04 Sales

It helped to be well-heeled in July—or at least it helped to be a retailer who caters to that specialty market.

High-end retailers fared best during the month, as sales continued to cool from the rapid-fire growth of early 2004.

July is traditionally a dead time for most retailers, according to Michael Niemira, chief economist for the New York–based International Council of Shopping Centers (ICSC), and July 2004 followed that trend.

The ICSC’s Chain Store Sales Index showed a 1.3 percent decrease in sales for apparel chains. Unseasonably cool weather throughout the United States threw a wet towel on demand for summer apparel items, Niemira said.

The index, however, saw an overall 3.1 percent increase, provided by the strong performances of wholesale clubs and drug stores.

Businesses such as The May Department Stores Co. of St. Louis blamed low sales on a postponement of a sales tax holiday in several states.

But many retail analysts, including Jeffrey Van Sinderen of Los Angeles–based B. Riley & Associates, wondered if poor sales could be entirely blamed on weather and unfortunate scheduling.

“The companies that had the right merchandise, at the right price, did really well,” Van Sinderen said. “The companies that did not really suffered.”

Many luxury retailers continued to rake in high sales, as they have done since late 2003. The Neiman Marcus Group Inc. of Dallas claimed same-store sales of 16.6 percent. Specialty store Chico’s FAS Inc. of Fort Myers, Fla., also reported a 13.7 percent increase in comp-store sales.

Several specialty stores focusing on young fashions—including San Francisco–based Gap Inc., City of Industry, Calif.–based Hot Topic Inc. and Foothill Ranch, Calif.–based The Wet Seal Inc.—reported negative same-store sales in July.

Analysts think the Back-to-School season could bring these companies back to financial health.

“Fashions are compelling this year, and it will bring customers back to the stores,” said Liz Pierce of the Los Angeles office of the Sanders Morris Harris Group. She also noted that Halloween sales have traditionally been a strong point for Hot Topic and thinks the rock- and pop-culture retailer will rally at that time.

Niemira forecast a slower pace of sales for the rest of the year but said sales will experience a growth spurt by the end of 2004, giving retailers a good Holiday season. —Andrew Asch