I had a chance to go through the majority of the May Retail Sales reports today and listen to the conference calls that were prerecorded by each one of the companies. While there’s no doubt we are in an economic funk and we can see it in the jobs reports, hiring patterns, housing market, etc., the numbers still were not that dire in today’s reporting.  Yes, there were absolutely a few dogs in the bunch that had large decreases in their year-over-year comp sales, and against a negative prior year I might add, but most were holding their own, and in some cases, increasing.

     The dogs of the day included Gap, Inc., which suffered a 14% drop and American Eagle Outfitters, which posted a 9% decrease.  It was also clear that there were some that were starting to show some early stage turnaround efforts such as Pacific Sunwear and Hot Topic.  For me, the interesting one to keep watching will be PacSun as it’s divested itself of it’s Footwear business, which at one point, was 16% of sales, or $222 million in revenue.  They’ve also shed the d.e.m.o division, which was also a drag on comp sales and financial results.  However, shedding those segments means a significant deleveraging of the overheads that had been built to support those areas. They are addressing the infrastructure but it’s taking time.

     That’s the fun about the retailers….it’s adapt or die.  You have a constant change in merchandising, consumer sentiment, various channels to reach your customer, etc..  It’s kind of like a wine in that no one year is alike….it’s constantly changing the environment around it.  It’s a great industry to learn from.

Thanks for reading.

 Jeffrey Ishmael