Thursday, July 9, 2009

Teen Retailers Out of Fashion

Source: Retail Sails

We got an early peek into same-store sales at a couple of teen retailers today, as both Hot Topic and Zumiez reported monthly sales results for June. Teen and mall-based retailers have been among the hardest hit over the past year, and there is not expected to be much improvement for the rest of the summer. Retailers hope the back-to-school season will bring some reasons for optimism:

- Hot Topic reported a decrease of 5.8% in net sales to $59.5 Million, and a 7.9% decline in overall same-store sales compared to the prior period. Torrid same-store sales were -10.3% and Hot Topic same-store sales were -7.2% for the month. Internet sales were a bright spot for the company in June, as sales were up 31% and sales increased 17% from a year ago. The company expects a high single-digit decline in same-store sales for the quarter, as July and August sales will be impacted by the back-to-school season falling a week later than last year. Hot Topic was a clear standout as the economy deteriorated during the fall, posting 7 consecutive months of same-store sales gains from October through April. However, their performance over the last 2 months, as well as their guidance for this quarter, indicates that they have succombed to weak consumer spending and lost business to rivals such as Aeropostale and The Buckle.

- Zumiez reported a decline of 7.9% in net sales to $32 Million, while same-store sales decreased 19.3% on top of a 3.4% decline in the year-ago period. They have now reported 10 consecutive months as well as 5 straight quarters of negative same-store sales results. The company said that all departments posted negative comps during the month, and the south and west were the worst-performing geographic regions. Weak comparable sales are expected to continue through July and August, hurt by labor day falling a week later than last year. However, this late back-to-school season should have a positive effect on September sales.

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