The weak data and the hot weather have also raised concerns over how the back-to-school period will play out. “If it’s going to stay this hot, the back-to-school merchandise had better be priced competitively in order to move it,” Telsey said.
While retail conditions in the U.S. are not ideal, Telsey’s top retailers of concern are those with international branches. Both Nike and Gap reported a significant drop in international sales.
In North America, Gap reported its fifth consecutive month of positive sales, but its growth was offset by a 14 percent decline in international revenue. “I think international is a cause for concern,” Telsey said, explaining that retail sales in London and China are more cautious and promotional than expected.
Telsey warned investors that any retailer with exposure to Southern European countries such as Spain, Greece, or Italy should be concerned.
Although June was a tough month for retailers, the sector is far from barren.
Telsey expects a good season for retail in the U.K. this quarter with the Olympics in July.Page 2 of 4 | Prev Page | Next Page