Retail Sales Up 5.5% but Are Pretty Lumpy; Home Despot Hurting

It seems that some retailers are doing great while others are getting hammered.

Most retailers reporting monthly fared well in June. Warehouse club and typical top retail performer Costco reported a solid 6% rise in June same-store sales, aided in part by higher fuel prices. It beat views for a 5% gain, says Perkins. Core U.S. same-store sales were also up 6%, topping forecasts for a 5.3% increase.

Giant drugstore operator Walgreen reported a 7.5% rise in June same-store sales on July 3, beating forecasts for a 6.8% increase. That same day rival Rite Aid posted a same-store sales increase of 3.9% in June, besting views for a 2.6% gain.

Action sports retailer Zumiez posted a 3.1% gain in June same-store sales late Wednesday, well ahead of views for a 2.3% gain.

So we have Costco and Walgreen doing great. Costco might be a better bellweather than Walmart when it comes to the US retail picture. I remember going to Costco the Thursday before 4th of July and it was a madhouse. Every parking space was full with people buying giant piles of soda, hotdogs, strawberries, etc. Some people were even buying big screen TVs as well. Maybe to watch the World Cup?

 

I'm not sure why Zumiez is doing so much better than other teen retailers though. Maybe it is just more foot traffic going into the store. I mean the dark and freaky look of Abercrombie with its shirt less dudes and booming music is finally wearing out its welcome. 

 

However it seems that Home Despot and Lumber Liquidators is dropping like a stone.

The report didn't bode well for the home goods sector: "Our reduced customer traffic has coincided with certain weak macroeconomic trends related to residential remodeling, including existing home sales, which have generally been lower in 2014 than the corresponding periods in 2013," said CEO Robert Lynch in a press release. "We now believe the prolonged purchase cycle associated with our customers' discretionary, large-ticket home improvement projects is likely to be delayed for some customers into the fall flooring season, and for others, into spring of 2015."

People just aren't fixing up their homes at such a high clip anymore. Maybe they are looking at it as less of an investment and more of a place they will stay in for a long time. So the need for hard-wood floors or granite counter-tops or whatever that look good to a home flipper aren't as important as other factors to someone that will live in that home for years. 

 

Or maybe people are saving more money and don't want to drop $1000s for something that merely looks good and is not very functional. That money could be better saved for a rainy day especially if it was years since that person was last employed. Even if a consumer just heard of someone that was unemployed for years it might put them in a mindset that it is better to bank that money. It is better to have a margin of safety instead of really nice wooden flooring.