While temperatures heated up much of the United States in August, retail sales warmed up a bit too, beating Wall Street estimates. Back to school sales helped figures as did more discounting which helped take the chill off consumers’ reticence to spend.
Based on today’s reports from about 30 retailers, 63% posted sales that beat Wall Street estimates, according to Thomson Reuters data. Industrywide, same-store sales rose 3.3%, while analysts had forecast an increase of 2.5% for the month. The International Council of Shopping Centers said August sales rose 3.2% by its count, and forecast September sales would rise 3%.
A 3% increase and above “represents a healthy U.S. consumer,” said Jharonne Martis, director of consumer research for Thomson Reuters. The August increase is also being compared with August 2009 when sales declined 2.8%. The figures are based on revenue at stores opened at least a year, considered a key measurement of retailer health because it excludes the effects of stores that open or close during the year.
Heavy promotions and 17 tax-free shopping holidays in many states helped to boost sales nationally, according to Ken Perkins, analyst for Retail Metrics.
Department Stores Well Positioned for Fall
Department stores fared well going into the back to school seasdon. Nordstrom, Dillard’s Macy’s , Kohl’s Corp. and JCPenney Co. all made a strong showing in August. Sales at teen and young adult retailers also were better than expected though moderately by modest gains as consumers held out for bargains on back-to-school items
“There is now a glimmer of hope for holiday sales,” Perkins said, noting that retailers were being heavily promotional. “There’s still serious concerns about the consumer’s ability to spend during the crucial November and December periods. August sales confirm that people are shopping around events and discounts. So the expectation is that we will get a better than lackluster Christmas season this year,” he said.
The American consumer appears to be spending more: in July, consumer spending rose 0.4%, the first time in four months, the Commerce Department said on Monday. Consumers remained selective about buying for back-to-school as they worry about a faltering economy. They’re also buying items closer to when they need them, analysts say.
“These solid trends were posted despite generally soft trends across apparel categories, as warm weather held back early fall/back-to-school sales across retail,” Goldman Sachs analyst Adrianne Shapira wrote in a note to clients. “This implies there could be some pent up demand heading into September, and if the weather turns cooler, comps could get a lift as consumers up their apparel spend.”
Among the results for retailers’ August sales are:
∙ Macy’s said revenue rose in August as back-to-school shopping helped the company top Wall Street forecasts. Revenue from locations open at least a year rose 4.3%, edging over the 4% gain that analysts expected. Total revenue for the month rose 6.2% to $1.64 billion, up from $1.54 billion, a year earlier. Terry Lundgren, chairman and ceo, said back-to-school business has been strong, thanks in part to robust sales of Madonna’s new clothing line, Material Girl and its private brand, American Rag.
∙ Dillard’s said that revenue in department stores open at least one year was flat in August, better than the 0.5% decline analysts expected. Total sales for August fell 1% to $426.8 million from $431.1 million last year. Footwear sales were significantly above trend during the period, the company said.
∙JCPenney had a 2.3% increase, better than the 1.6% gain. The company said its monthly comparable store sales growth was in line with its expectations, compared to prior year’s sales decline of 7.9%. Total company sales edged up 0.8% to $1.44 billion from prior year’s $1.43 billion. Year-to-date, comparable store sales grew 1.4%, compared to prior year’s decline of 8.4%, and total sales grew 0.6% to $9.31 billion. Men’s and children’s apparel were the top performing merchandise divisions with strong performance by new brands in kids, Uproar and Supergirl by Nastia.
∙Kohl’s same-store sales rose 4.5% compared with a 3.2% in 2009. Kevin Mansell, ceo, said that the department store’s results exceeded the company’s plan. Kohl’s reported a 7.7% rise in total sales in August to $1.42 billion from $1.32 billion a year ago. Year-to-date, comparable store sales increased 5.7%, and total sales grew 9% from last year to $9.55 billion. Home business produced the strongest comparable store sales for the month. Men’s and footwear also outperformed the company average, Mansell said.
∙Nordstrom Inc. reported August same-store sales at stores open a year or longer increased 6.3% over the same time last year, exceeding analysts forecast of 5.9%. Total retail sales increased to $615 million from $541 million in August 2009. Year-to-date same-store sales have increased 9.5% compared with the same time last year and year-to-date total retail sales have increased to $5.02 billion from $4.39 billion in 2009.
∙Saks Inc. missed estimates, coming in at only a 1% gain in same store sales and that was compared to a drop of 19.6% a year ago. “August comparable store sales were negatively impacted due to reduced levels of clearance inventory,” the retailer said in a statement. Analysts had expected the figure to rise 4.3%. Overall revenue for August rose 5% to $1.4 billion from $1.33 billion last year. Best-selling items included women’s footwear, jewelry, dresses, makeup and designer apparel. Rumors have been circulating this week that a group of U.S. and British private equity firms may try to buy the retailer for $1.7 billion, about $11 a share.
∙Bon-Ton reported a 4.6% drop in same-store sales, worse than expectations for flat results. Total revenue for August fell 5% to $187.2 million from $197 million last year. Year-to-date, revenue in stores open at least one year rose 0.8% while total revenue rose 0.4% to $1.46 billion. Best performing categories included underwear, home products, footwear, makeup and jewelry. Coats and jackets, and most apparel categories were weaker. “We begin September with fresher inventories and apparel clearance inventory down 17% compared with the prior year,” Tony Buccina, vice chairman and president of merchandising.
∙Stage Stores increased 2.4% to $114 million from $111 million a year earlier. Comparable store sales rose 0.5%, with growth in accessories, children’s, dresses, footwear, intimates, junior sportswear and men’s. Stage Stores ceo Andy Hall, commented, “While today’s macroeconomic environment has created a cautious consumer sentiment, our back-to-school performance met our expectations.”
∙Target said sales of back-to-school items and food helped revenue in stores open at least a year rise 1.8% in August. But the discount retailer’s results just missed expectations for a 2% increase. Gregg Steinhafel, chairman, president and ceo stated, “August sales were in line with expectations. We’re pleased with our strong performance in back-to-school and back-to-college categories, as well as our performance in apparel and food. Guest traffic trends remained healthy throughout the month.” Electronics and home were weaker. For the year-to-date period, the company’s comparable store sales were up 2.2% versus a decline of 4.7% in the same period last year. Net retail sales were $35.31 billion, an increase of 4.5% a year ago.
∙ Gap Inc. said its same-store sales were flat compared with a drop of 3% last year. Net sales for August were $1.1 billion. By division, same-store sales fell by 1% at Gap North America and dropped 2% at Old Navy North America. But Banana Republic North America and its international business were both in positive territory, rising 6% and 5% respectively. “While results were mixed across our brands in August, we remain focused on our overall goal of driving top line sales growth,” said Sabrina Simmons, chief financial officer. Year-to-date net sales are up 4% to $7.77 billion, with comparable store sales 2% ahead.
∙Limited, operator of Victoria’s Secret and Bath and Body Works, posted a 10% gain in August same-store sales, beating the 7.3% increase that analysts had predicted. The company booked a 12.3% rise in net sales to $630.3 million in the month, up from $561.4 million last year.
∙Abercrombie & Fitch reported a 6% increase, slightly ahead of analysts’ estimates for a 5.9% gain. But what helped drive business was a generous 40% discount, analysts say—a turnaround from August 2009, when the retailer held on to its “no discounts” strategy, sales sank 29%. Highlights included an 80% rise in international net sales, including direct-to-consumer sales, to $50.8m. By division, Abercrombie & Fitch same-store sales increased 9%, Abercrombie Kids fell 9%, and Hollister Co. rose 7%.
∙Aeropostale Inc. struggled with a 1% decline, missing analysts’ expectations of a 1.2% gain. The company said it had better results in peak back-to-school regions, showing shoppers are buying more close to when they need the items. Total net sales for the month rose to $252.5 million, up from $241.7 million a year ago
∙American Eagle Outfitters reported a 1% comparable-store sales gain when analysts’ projected a 1.1% rise, and backed its earnings view for the current quarter.
∙The Buckle reported that its August comparable store net sales decreased 3.5%. Net sales for month increased 0.9% to $85.2 million, up from $84.5 million in 2009. Comparable store net sales year-to-date ended August 28 decreased 2.2%. Net sales for the 30-week fiscal period increased 2.4% to $488.6 million up from $477.1 million in the prior year.
∙Hot Topic remained in the red with same-store sales growth being negative 3.7% in August. However, the fall in the same-store sales narrowed from a negative 8.1% witnessed in the prior-year period. This was the 16th consecutive month of negative same-store sales. Total sales, at $65.3 million, dropped 2.0% for the month of August.
∙ Zumiez remained the bright spot with positive same-store sales of 9.1% for August, handily surpassing a negative 12.1% in the same period last year. The August results marked the ninth consecutive month of positive same-store sales. Net sales jumped 14.9% to $59.4 million from $51.7 million in the same period last year. Zumiez sees comparable store sales to increase in the mid-single-digit range for the third quarter.
∙The Wet Seal, which has struggled in recent years to regain its past strength, reported a 1.1% increase in same-store sales, with a rise of 1.5% at Wet Seal and a drop of 1.8% at Arden B. The company said the results were in line with expectations, and were lifted by a better merchandise assortment at Wet Seal. Total sales rose 4.2% in the month to $52.6 million.
∙Express returned to profit in the second quarter ending July 31, thanks to a 9% increase in net sales and a 6% rise in comparable store sales. “The ongoing benefit of our go-to-market strategy, along with outstanding execution of our key growth strategies, is resulting in increased sales productivity and profitability for our company, and therefore we are confirming our guidance for the full year,” said Michael Weiss, president and ceo.
∙The Cato Corp. said its sales for August rose 5% to $61.9 million, up from $59.0 million a year earlier. Same-store sales increase increased 2%.
∙Ross Stores reported that sales increased 9% to $608 million for August, up from $557 million in August 2009. Comparable store sales for the month grew 5% on top of a 6% increase in the prior year. For the seven months ended August 28, sales totaled $4.455 billion, an 11% increase over the $4.018 billion in the seven months 2009. Comparable store sales for the seven months grew 7% on top of a 3% increase in 2009. Michael Balmuth, vice chairman and ceo, said,” Our ability to offer terrific bargains on a wide array of product for back-to-school shoppers drove healthy traffic to our stores during the month. Dresses, home and shoes were the strongest merchandise categories, while Florida was the best-performing market. Looking ahead, we continue to forecast same store sales of up 1% to 2% for September and flat to up 1% for October.”
∙ The TJX Companies saw its August sales rise 6% to $1.7 billion, up from last year’s $1.6 billion. Same-store sales increased 2% compared to last year. The company said its “excellent value proposition on great fashions and brands are drawing people to our stores.”
∙Stein Mart where sales rose 8.5% and topped analysts’ expectations that sales would be flat. Total revenue rose 6.3% to $80.9 million, up from $76.1 million last year. The company said sales were strongest in its home section along with women’s career clothing and accessories. Sportswear continued to struggle.
∙ BJ’s Wholesale Club said today that same-store sales at its warehouse clubs rose just 2.4% as more customers came to its stores but spent less. The results were shy of the 3.3% increase that analysts expected. Excluding sales at the gas pump, sales at clubs open at least a year rose 1.9%, also missing analysts’ 2.4% projection. For the month, total sales rose 4.9% to $794.6 million from $757.7 million.
∙Costco said that revenue at stores open at least a year increased 7% in August buoyed by higher gas prices and improved international revenue. This topped the 4.2% rise analysts expected. But fourth-quarter and full-year revenue missed Wall Street expectations.
∙ Family Dollar Stores said same-store sales rose 6.1% in August, beating the average analyst estimate of 3.1%.