Summer Heat Slows July '05 Sales
July is typically considered the beginning of the Back-to-School season across the United States. But many consumers were not interested in buying warmer fall clothes as one of the strongest heat waves in a century overtook most of America, according to Michael Niemira, chief economist of the New York–based International Council of Shopping Centers (ICSC).
Niemira said the high temperatures were one of the main reasons why July retail sales came in slightly below his forecast of a 4 percent increase. The ICSC’s index of 72 chain stores saw an increase of 3.6 percent over July of last year. Also contributing to the decrease in apparel sales was the fact that consumers spent more money on vehicles because of promotional discount programs.
But the summer heat has yet to bake much of California, where most temperatures have hovered in the mid-80s outside of the desert areas. The temperate weather could be one reason why mall operators such as Janet la Fevre said the Back-to-School season started on a positive note.
“Retailers say they’re on track and on target with merchandise and traffic,” said la Fevre, senior marketing director of the Glendale Galleria in Glendale, Calif. The General Growth Properties Inc.–owned mall is home to several teen-friendly stores, including Abercrombie & Fitch, American Eagle Outfitters and Anchor Blue.
Many of California’s juniors retailers reported a good month. Anaheim-based Pacific Sunwear of California Inc. reported a 4 percent increase in comparative-store sales, and Foothill Ranch–based The Wet Seal Inc. reported a 50.9 percent increase in same-store sales from the past year, when it had suffered double-digit losses.
Hot Topic Inc. posted a decrease of 5 percent in comparative-store sales in July. The City of Industry, Calif.–based company has had negative single-digit comparative-store sales since May 2004. The teen retailer experienced a brief respite in January and February but has not been in the black since. Retail analysts, however, still remain bullish on the company.
Liz Pierce of the Los Angeles office of Sanders Morris Harris Group Inc. maintained her buy rating for Hot Topic because she said she believes the company is going to rally with improved merchandise. She also wrote in an Aug. 4 research note that Hot Topic’s traditionally strong-selling seasons—Halloween, Holiday and Back-to-School—are coming up and the company’s sister store, Torrid, has yet to realize big square-footage growth.
Niemira forecasted moderate summer sales will continue and then pick up in mid-September, when, most likely, cooler autumn temperatures will overtake most of the United States and school kids will start spending money on Back-to-School clothes in earnest. —Andrew Asch
