Economic environment begins to affect sales
Whilst results from luxury brands do not appear to have been hit too harshly by the recent financial turmoil in the USA, some lower-priced retailers are starting to feel the pinch. Sales slipped 8% to $173.9 million for the third quarter at American footwear retailer Shoe Carnival, Inc. due to warm weather and a “challenging economic environment”, whilst New York-based specialty athletic retailer Foot Locker Inc. reported a loss of $33 million, compared with net income of $65 million in the same period last year.
Comparable store sales at Shoe carnival declined 5% for the thirteen-week period, whilst gross profit margin decreased to 29.1%, down from 30% in the comparable period last year, and net income fell significantly, slipping to $4.2 million from $8.4 million in the third quarter of 2006. For the first nine months, net income decreased to $11.7 million from $18.6 million, whilst net sales fell 2% to $494.3 million. Comparable store sales declined 5% compared with the same period last year.
"We believe the current challenging economic environment continues to directly affect our target consumer, and consequently, had a negative impact on both traffic and sales throughout the third quarter. Additionally, an extraordinarily warm fall selling season has suppressed the sales of traditional fall and winter product, especially boots,” said Mark Lemond, chief executive.
At Foot Locker the news was no better as sales decreased 5.2% in the third quarter to $1,356 million, down from $1,430 million in the same prior-year period, whilst comparable store sales slipped 5%. For the first nine months, the company reported a net loss of $34 million, whilst sales decreased 3.5% to $3,955 million from $4,098 million last year, and comparable store sales fell 5.8%.
"Our third quarter sales were disappointing, reflecting a challenging external environment and the lack of exciting fashion trends in athletic footwear and apparel,” said chief executive Matthew Serra.
