801 S. Grand Ave., Ste 1000 Los Angeles, CA 90017 450 7th Ave., Ste 1006 New York, NY 10123 Tel: 213-430-4888 Tel: 212-629-8688 Date : June 5, 2015 Analyst : Charles Kim MARKET REPORT 2015 MAY SAME-STORE SALES: MODEST GROWTH FOR RETAILERS Retailers' February/2015 ~ May/2015 Same-Store Growth Rate (Unit: year-over-year %) Company May/15 Apr/15 Mar/15 Feb/15 Company May/15 Apr/15 Mar/15 Feb /15 Buckle 2.4% -3.8% -0.5% -2.7% Stein Mart 1.9% -1.5% 11.2% 2.6% Cato Corp. 0.0% -14.0% 12.0% -10.0% Zumiez -2.2% -4.0% 5.5% 6.9% -1.0% -15.0% 2.0% -4.0% Costco 0.0% 0.0% -2.0% 2.0% 5.0% -1.0% 7.0% 6.0% Rite Aid 0.1% -0.5% 2.5% 1.6% Gap, Inc. Limited Brands -Sources: Respective companies' home pages; Forbes; International Business Times -Same store sales figures are from stores that operated over 1 year and is a gauge of health of a retailer Chain-Store After a disappointing sales report in April, specialty retailers showed signs of improvement in May. Buckle (2.4%), L. Brands (5.0%), and Stein Mart (1.9%) reported positive sales growth while Cato (0.0%) and Costco (0.0%) reported flat sales for the month. After a steep decline of 15.0% in April, Gap, Inc. posted a sales decline of 1.0% with Gap and Banana Republic brands declining 6.0% and 5.0% respectively. The Old Navy brand recovered from a 6.0% decline in April by posting a 6.0% growth this month. Zumiez (-2.2%) has now reported negative sales growth for two consecutive months after posting positive growth from March of 2014 to March of 2015. Retailers’ modest growth in May can be contributed to Mother’s Day and Memorial Day promotions. News of the Month: Ann, Inc., owner of Ann Taylor and The Loft, was acquired by Ascena Retail Group for $2.1 billion. Ascena Retail Group’s portfolio includes $4.8 billion in annual revenue and 3,900 stores under Lane Bryant, Dress Barn, Catherines, and Maurices. Through this acquisition, Ascena Retail Group will add over 1,000 stores and more than $2.5 billion in annual sales. Employment The employment situation in May was bright with the U.S. economy adding 280,000 non-farm payroll jobs. This figure easily exceeds the expected gain of 220,000. Two consecutive months of 200,000-plus gain indicate that the dismal March figure was just a temporary slowdown of the labor market. Trade & transportation sector gained 50,000 jobs while the construction sector added 17,000 jobs. A slight increase in the labor force participation rate is one of the main reasons for the uptick in the unemployment rate which rose 0.1P to 5.5%. May’s employment report is unlikely to force the Federal Reserve to raise interest rates this month. QUOTE OF THE MONTH: I do not believe that any peacock envies another peacock his tail, because every peacock is persuaded that his own tail is the finest in the world. The consequence of this is that peacocks are peaceable birds. -Bertrand Russell