Retailers Welcome July '06 Surprise
Consumers were expected to stay home during July. The heat across North America was sweltering. Rising gasoline prices made many people cut back on car trips. However, retail sales gave businesses a pleasant surprise, according to the New York–based International Conference of Shopping Centers.
The retail sector’s performance exceeded expectations by increasing 3.5 percent over the same time the previous year, said Michael Niemira, ICSC’s chief economist and director of research.
“Given all the external factors chain stores faced during the month, from weather to the fact that July is a clearance month and the third least important month for retailers, the overall results were better than we expected,” Niemira said.
California economists interpreted July’s results as a reason for cautious optimism. “The hot weather did drive business to malls,” said Jack Kyser, chief economist for the Los Angeles County Economic Development Corporation. “But lower- to middle-income households have been hurt by gas prices, and they’re quaking in their boots about their electric gas bills.” The higher cost of fuel may hurt upcoming back-toschool sales, Kyser said.
Retailers serving the teen market reported mixed results in July. Some juniors retailers, such as Foothill Ranch, Calif.–based Wet Seal Inc., reported a good month when it reported an increase in its same-store sales of 6.4 percent.
Others, including Pacific Sunwear, based in Anaheim, Calif., and Hot Topic, based in City of Industry, Calif., suffered. For Pac Sun, the decline was 10.6 percent and for Hot Topic it was 7.2 percent.
Many teen retailers were hurt because they started stocking their stores with heavier weight back-to-school clothes during July. It was a time when consumers couldn’t bear to think of wearing anything but shorts and T-shirts, said Jeffrey Van Sinderen, a retail analyst with Santa Monica, Calif.–based B. Riley & Co.
“The companies offering a higher concentration of ’wear now’ merchandise did better,” Van Sinderen said.
Pacific Sunwear showed back-to-school fleece and denim during the hot month of July, however, and according to Van Sinderen, the surf and skate retailer also stumbled because of declining sales in footwear.
The ICSC forecast August to be a good month for retail. Retail sales will increase 3–3.5 percent as more families shop for back-to-school apparel. —Andrew Asch
