May sales in U.S. sporting goods stores were up 1.1 percent from April’s level, but were down 2.4 percent year-over-year, according to monthly data reported by the U.S. Census Bureau. Overall year-over-year sales growth of 3.2 percent unadjusted in May had the National Retail Association proclaiming the figure shows both consumer resilience and confidence in the U.S. economy. Still, the trade group’s chief economist warned that an escalation in trade tariffs “will undoubtedly create a considerable downdraft to confidence and spending, or lead to a pullback in spending.” May’s retail sales gains were broad-based with nearly all segments posting gains. Online and other non-store sales were up 11.4 percent year-over-year. The U.S. Census Bureau also made revisions to April retail sales figures last week, reversing a 0.2 percent monthly loss to a gain of 0.3 percent.
Caleres-owned Famous Footwear is continuing to actively shed inventory in Q2 after reporting a 1 percent comparable sales decline and overall 3.1 percent revenue drop to $352.2 million on 28 fewer doors in Q1. A mid-single digit comp gain in April, which included record athletic sales, was unable to turn around the period’s fortunes that saw a high-single digit comp sales slide in February. CAL CEO and President Diane Sullivan told analysts the chain will continue to tighten its relationship with customers through its growing loyalty club program and also “elevate its product assortments” through stronger relationships with vendors.
Nike, an estimated 22 percent of Famous sales in FY18 according to analysts, is projected to have higher sales within the banner this year. “The new (Nike) product as it is showing up, we’re actually seeing some nice gains,” Caleres CFO Ken Hannah told analysts. “It’s really the clearing out of the older product that’s putting the pressure on the first half of the year. But we are expecting Nike in total to net to a positive.”
On the subject of tariffs, Caleres senior management confirmed it has been actively diversifying production away from China over the past five years, now sourcing approximately 60 percent of its merchandise mix in the country. Contingency plans in place, in case additional duties are added to Chinese imports, include additional sourcing shits, possible price increases and working with factories on ways to reduce costs.
Lululemon will begin testing “self-care” products online and 50 of its stores as part of the company’s strategy to dabble in white space and introduce innovation to its customers. New test categories include yoga, training and running. But the company says it remains committed to its core women’s business, projected to grow “in the low double digits” and men’s, with an annual growth target of 20 percent, for the next five years. In July, Lululemon will open a 20,000-sq.-ft. experiential store in Chicago’s Lincoln Park section that will feature multiple studios, meditation space, healthy juice/food offerings and dedicated space for community gatherings. Meanwhile, the brand has expanded its membership program to a third city—Austin, TX—and has expanded its Buy Online, Pick Up In Store capability to 115 doors.
In Q1, LULU’s North American business grew 18 percent as store traffic increase in the high single digits. Senior management says the company has significant growth opportunities in the region via its merchandise assortments, flexible store formats and unique event offerings. Meanwhile, the current full year FY19 outlook calls for a revenue range of $3.73-3.77 billion and a comparable sales increase in the low double digits on a constant dollar basis.