Inside This Issue - News
July sales trends are encouraging
August 20th, 2012
NEW YORK – Bargain prices and the country’s hottest month on record boosted customer traffic in July, as chains cleared out summer stock to create space for back-to-school products.
The July results provide an early glimpse at the B-T-S season, which is second only to the winter holidays as a volume generator. While July is usually one of the lowest volume months, the latter part of the month kicks off the B-T-S selling season.
Overall same-store chain sales, excluding drug stores, rose 4.6%, according to the International Council of Shopping Centers (ICSC). The performance was the strongest monthly gain since March’s 6.8% advance.
"The pace of sales in July improved appreciably," said Michael Niemira, vice president of research and chief economist for ICSC. "July is typically dominated by summer clearance, so this stronger-than-expected performance is particularly encouraging, especially after the softer three-month run we have just been through in the industry and the overall economy."
Helped by increased B-T-S activity, ICSC expects sales to increase by a strong 4% to 5% (less drug stores) in August.
Among the stronger performers in July was Target Corp. Target’s same-store sales increased 3.1%, beating analysts’ average forecast of 2.7% .
Chairman, president and chief executive officer Gregg Steinhafel noted that second quarter same-store sales also climbed 3.1%, which was in line with Target’s expectation going into the quarter. "Guests continue to respond to our innovative merchandising, remodel program and 5% REDcard Rewards, driving healthy increases in traffic and sales in a consumer environment that remains quite challenging," he said.
Costco Wholesale Corp.’s U.S. same-store sales jumped 7% as the retailer topped analysts’ expectations for the first time since February. The metric was flat for international stores. But backing out the effect of lower gas prices and a stronger dollar, international same-store sales climbed 7%, with the figure advancing 8% for domestic units.
Walgreen Co.’s same-store sales slid 7%, as the chain continued to be hurt by its loss of business from Express Scripts Inc. Walgreens announced in mid-July that it had come to terms with Express Scripts and its contract with the pharmacy benefits manager would be renewed as of September 15.
The chain’s July same-store pharmacy sales plummeted 9.7%. The negative impact on same-store prescriptions filled due to no longer being part of the Express Scripts network was 10.8 percentage points. Express Scripts accounted for 12.7% of Walgreens’ prescription sales in July 2011.
Same-store sales at Rite Aid Corp. increased 0.5%. Front-end same-store sales advanced 1.2%, with same-store pharmacy sales — including a negative impact from new generic introductions amounting to approximately 742 basis points — edging up 0.2%. The prescription count at comparable stores increased 4.5%.
Fred’s Inc. reported same-store sales rose 1.2%, reflecting promotions that "resulted in a significant improvement from recent months," said CEO Bruce Efird. "Pet, household supplies and pharmacy were standouts in July, with pharmacy benefiting from continued growth in script counts."