As described in two separate shopping adventures completed in two different cities, CVI was correct to predict the dismal same-store sales for the month of April. In a report by Tiffany Choy in New York City and by Stefanie Rosenblatt in Toronto, the two depicted encounters of horrific weather conditions and less-than-lustrous summer merchandise, leading up to an overall wash-out for retailers in Spring 2007.

Former powerhouse Gap (GPS) took one of the worst beatings this past month with same-store sales falling even lower than what most analysts were predicting. A decline of 16 per cent, this figure is another indicator of Gap being a prime target for a takeover. In conjunction with a still-vacant CEO position, Gap’s long-term future will likely be determined by the actions taken in the next few months. This company’s tumbling same-store sales parallels fellow competitor Abercrombie & Fitch (ANF), who’s April figures came in at a loss of 15 per cent.

However, not all retailers ended with such dismal same-store sales for the month. Limited Brands (LTD) lost only a single percentage point, and Sweden-based H&M posted an increase of eight per cent. These numbers demonstrate that fashion-forward companies are taking over the leading role in today’s retailing industry. All-American brands like GPS and ANF have their work cut out for them if they plan on reclaiming their positions.

Based on what our analysts have seen in retailers’ collections, this year’s summer season isn’t a forecast for clearer skies. May’s same-store sales will be a good first indicator of which retailers are playing the right cards for the season, and this time, the figures can’t hide behind torrential weather.


The Canadian Value Investor © 2007