Merk Investments: Chain Store Sales

Chain store sales arrived up 2.6% for the month of July below the 3.4% consensus market estimate.  The 2.6% posting is well below the expansionary trend of 3.29%. Ex drug stores same store sales increased 2.5%. Sales at appears stores declined -5.5%, luxury stores fell -5.1% and furniture chains saw a -10.0% drop in sales. Discount chains saw a 2.3% increase, wholesale clubs advance 9.5% and drug stores advanced 3.2%.

The data was mixed among select chain stores. Wal-Mart advanced 3.0%, below the consensus forecast of 3.4%, but discounter Costco increased 6.0%. Including gasoline sales the Wal-Mart saw a 3.7% increase and sales at Costco were up 10.0% Teen apparel giant Abercrombie declined -7.0% and the Gap saw a -11.00% drop. Upscale retailer Nordstrom saw a 6.1% fall in sales, while retailers that primarily cater to the wealth Saks and Neiman Marcus saw a -5.6% and -1.7% fall in activity respectively.

The July same store sales were impacted by the diminished influence of the stimulus checks provided by the Washington earlier this year. Looking forward the environment for retail sales should be buffeted somewhat by back to school sales in August and select tax holidays to support that activity around the country. However, the general rise in inflation and the decline in personal disposable income should weigh quite heavy on overall personal consumption for the remainder of the year.

Joseph Brusuelas
Merk Investments
Chief Economist/VP Global Strategy

This report was prepared by Merk Investments LLC, and reflects the current opinion of the author.  It is based upon sources and data believed to be accurate and reliable.  Opinions and forward looking statements expressed are subject to change without notice.  This information does not constitute a solicitation or an offer to buy or sell any investment product, nor provide investment advice. Merk Investments does not own any of the stocks mentioned; this is not an offer to buy or sell any security mentioned.