Barclays U.S. Department Stores/Broadline: May Sales Review

June 1, 2012 2:35 PM EDT
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Barclays U.S. Department Stores/Broadline: May Sales Review

Analyst, Robert S. Drbul, said, "The Barclays Broadlines/Dept. Store Same Store Sales index increased 3.5 % in May, below our expectation of 4.4% and compared to a 7.8% increase last year. On a two-year basis, the index decelerated sequentially to 11.3%, compared to the 14.0% two-year increase in April. May results reflected the impact from a later Mother's Day, warm seasonal weather and Memorial Day events for several department stores. Handbags, shoes and accessories have remained strong categories as noted by Saks Inc (NYSE: SKS), Nordstrom (NYSE: JWN), Macy's (NYSE: M) and Kohl's (NYSE: KSS). May represents a small selling month for department stores, as it falls between the Easter Holiday and the Back to School selling season, with 7.6% of total sales in 2011 generated in May."

"Results at the high end were largely in line with our expectations, though Nordstrom did outperform our estimate of 2%-4% with comps up 5.3%. Saks and Macy's reported comps up 4.0% and 4.2%, respectively."

"While Kohl's (NYSE: KSS) sales came in below our expectation for a (2)%-0% comp, down (4.2)%, we are maintaining our $1.02 estimate for 2Q12, and expect the inventory position to improve by July. We now expect the 2Q12 comp to be down (1.0)%, compared to our prior estimate of 0.5% and including an expected 0-1% increase in June."

"Target (NYSE: TGT) reported comps up 4.4% in May, in line with our estimate of 3%-5%. Two thirds of the increase (+2.9%) was driven by an increase in average transaction size, with the remainder from traffic. We continue to see a benefit to traffic trends from Target's expansion of its P-Fresh offering, with Food comps up +LDD in May."

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