Steady Growth, Weakness Shape July '07 Sales
Retail sales grew at a steady pace in July, but the performance was judged as weak by many economists.
The entire retail sector increased 2.6 percent, according to the New York–based International Council on Shopping Centers. It was a decline compared to the sector’s performance in July 2006. The sector’s same-store sales reported an increase of 3.6 percent then.
The strongest area in the retail performance for July 2007 was luxury retailers. Same-store sales climbed 10.8 percent compared to the same time in the previous year, according to the ICSC.
Yet the performance of specialty apparel worried some analysts. The sector declined to -4.4 percent in July. It was an improvement compared to specialty retail’s performance in April of this year, when it suffered a decline to -10.1 percent. The sector’s best performance of 2007 was in March, when specialty apparel retailers reported a 7 percent growth.
Teen retailers might look forward to better sales in August, according to Jeffrey Van Sinderen, a retail analyst with Los Angeles–based B. Riley & Co. Back-to- School sales should attract more consumers to stores. “But it won’t be spectacular,” Van Sinderen warned.
He said that a weakening economy, which is reeling from a poor housing market and bad headlines from financial markets, has affected consumers’ wallets.
The ICSC’s chief economist, Michael Niemira, also blamed problems in the wider economy for slower consumer spending. He forecast that August’s comparable-store sales for the retail sector will increase 2 percent to 2.5 percent. This performance should mirror the strengths and weaknesses of July’s sales trends.
Despite a cloudy forecast, bright spots in the apparel business stood out. The long-troubled Gap North America division of San Francisco–based Gap Inc. reported samestore sales of 2 percent compared to a decline to -13 percent during July 2006. While sales performances at teen retailers were generally poor, Everett, Wash.–based surf and skate retailer Zumiez Inc. reported an increase in comparable-store sales of 8.4 percent. —Andrew Asch
