Retailers’ June Sales Little Changed While Luxury Gains

U.S. retailers’ June same-store sales about matched analysts’ estimates, with luxury chains such as Saks Inc. (SKS) and discounters like TJX Cos. (TJX) topping expectations and stores targeting middle-income consumers trailing projections.

Same-store sales at the more than 20 companies tracked by Retail Metrics Inc. rose 0.3 percent, compared with the 1 percent average estimate of analysts surveyed by the research firm. The results follow a 7.2 percent increase last year.

Consumers have been spooked by the unemployment rate staying above 8 percent, sending many to discount chains such as TJX, which posted a 7 percent sales gain. At the same time, luxury consumers have continued to spend with the stock market still up for the year. The Standard & Poor’s 500 Retailing Index gained as the broader index declined.

“The high-end consumer has faired particularly well throughout this recovery,” Ken Perkins, president of Swampscott, Massachusetts-based Retail Metrics, said in an interview. “On the low end, a lot of middle-income consumers have traded down.”

TJX, which owns discount stores T.J. Maxx and Marshalls, beat analysts’ average estimate for a 3.7 percent sales increase. The Framingham, Massachusetts-based company said profit this year may be as much as $2.39 a share, up from a previous forecast for a maximum of $2.37. The shares rose 3.7 percent to $44.09 at the close in New York.

Limited Sales

Same-store sales at Limited Brands Inc. (LTD), the parent company of Victoria’s Secret, gained 7 percent, beating the average estimate of 2.6 percent. Sales at New York-based Saks rose 6 percent, topping the 4.2 percent average estimate.

Columbus, Ohio-based Limited’s shares rose 4.5 percent to $46.12, while Saks gained 2.5 percent to $11.19. The S&P retail index climbed 1 percent. The S&P 500 slid 0.5 percent and has gained 8.7 percent this year.

Sales at Target Corp. (TGT) rose 2.1 percent, falling short of the average projection for a 2.8 percent gain from analysts surveyed by Retail Metrics. Macy’s Inc. (M), the second-biggest U.S. department-store chain, posted a 1.2 percent increase in same- store sales, missing the 2.3 percent estimate.

Macy’s said in a statement today that the “stagnant” economy and reduced spending from tourists hurt sales.

Consumer confidence and other macroeconomic indicators have been falling,” Keith Jelinek, a director in the retail practice at AlixPartners LLP, said in a telephone interview. “This consumer’s psyche says, ‘I’m not going to spend.’”

Target shares fell 1.1 percent to $57.15, and Macy’s rose 2.7 percent to $34.27.

Back-to-School

Most chains count locations open at least a year to tabulate same-store sales. The revenue is a key indicator of a retailer’s growth because new and closed sites are excluded.

June’s results may be a sign that retailers will have to discount more than expected to draw shoppers for the important back-to-school shopping season, Perkins said.

“They have to have a reason to spend,” Perkins said. “If they are given a reason to spend, they do come out and buy.”

To contact the reporters on this story: Kelly Blessing in New York at kblessing@bloomberg.net; Matt Townsend in New York at mtownsend9@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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