Retail Sales Tough in May
Retail sales reports for May were downbeat. Cato Corp., a Charlotte, N.C.–headquartered retailer, had a particularly tough month when it posted a same-store-sales decline of 16 percent. The double-digit drop followed relatively a far-less decline in April, when Cato reported a 2 percent same-store decline. The result beat Wall Street estimates. Cato’s May declines were blamed on merchandising, according to John Cato, the retailer’s chairman, president and chief executive officer. “Our negative sales trends persisted throughout May as we continued to work through our merchandise-assortment missteps,” he said.
The Buckle Inc. was another retailer that experienced a setback after a less-severe April. Its May same-store sales declined 9 percent, compared to its April results, when it beat estimates and delivered a decline of 3.5 percent.
L Brands posted a decline of 7 percent in May, blaming the flagging business on continuing costs from the recent exit from categories such as swim by the company’s leading brand, Victoria’s Secret.
Mall action-sports retailer Zumiez Inc. provided a bright spot to the month’s doldrums. Same-store sales increased 3.3 percent. In a statement, Rick Brooks, Zumiez chief executive officer, listed a few reasons for the good performance.
“Our teams are doing a good job striking a balance between achieving near-term targets in a challenging retail environment and executing strategies that are laying the foundation for long-term profitable growth. I am confident we are on the right course to grow both sales and earnings to generate value for our shareholders,” he said.
Also on June 1, Zumiez reported results for its first quarter of the fiscal year. Same-store sales increased 1.8 percent. Total net sales increased 4.7 percent to $181.2 million. The company introduced guidance for its second quarter, which is scheduled to end on July 29. It forecast a same-store-sales increase of 1 percent to 3 percent for that quarter. Zumiez also announced that it intends to open 19 new stores in fiscal 2017. Nine of these stores will be located outside of the United States.