Back to School Lifts August Comp Sales

In Reports, What's New, Industry News by Jeff Prine

back to school New York—Retailers earned a shiny red apple in August as back to school spending helped lift sales.

According to Ken Perkins, president of Retail Metrics, August comparable store sales rose 5%, beating the 4.2% increase that analysts had expected.

Of the retailers who still report monthly sales, Costco, L Brands, Cato, Zumiez and Buckle all beat views but Gap Inc. missed. The overall solid results for August, combined with recent comments from retailers, bode well for this year’s back-to-school season. “Based on our store checks, it looks like the back-to-school season is shaping up to be a decent one,” Perkins said. “The month was a solid one, driven by back-to-school event shopping and improved consumer confidence that’s reflective of an improved jobs picture.”

‘Event Driven’

Perkins noted that retailers’ back-to-school commentary generally has been positive, citing Macy’s, Urban Outfitters and TJX Cos as among those that gave good initial reads on back to school when reporting their second-quarter results.

“That is important and indicative of it not being what it was last back to school, which was very difficult,” Perkins said. “With all the positive commentary around back to school, it’s cause for some hope that the (retailers’) third-quarter earnings and comps will show improvement from the second quarter.”

Perkins said consumers are still “event driven” in their shopping, and August comp store sales were fueled largely by back-to-school shopping. Helping to lure back-to-school buying were aggressive promotions with plenty of good deals, he added.

Michael Niemira, consultant for the International Council of Shopping Centers, calculates a 4.8% gain in August comp. sales vs. a year earlier.

Niemira’s tally includes nine retailers. Based on that, the August results reflect an “underlying pickup in consumer demand,” which started in April, he said.

“This slice of reporting firms paints a picture of improvement in overall spending of about one percentage point from the same time last year,” he added. “For me, it says the back-to-school performance was probably pretty good.”

But NRF Chief Economist Jack Kleinhenz is concerned about disappointing employment figures.

“The weaker job growth presents a mixed picture of the economy compared to other indicators implying the economy is growing. Today’s report calls into question how much momentum the U.S. economy will show in the second half of the year.”

Many retailers, including the major department stores and most big-box retailers such as Walmart, Macy’s, JCPenney etc., stopped reporting monthly sales some time ago, making it difficult to get a snapshot of the health of the entire industry. Nonetheless, the reported numbers do provide a kind of interim report on the quarter’s performance at the country’s retail stores.

Those that still report include:

L Brands, which owns Victoria’s Secret, Bath & Body Works and other brands, said Thursday that comparable store sales rose 5% in August, handily topping analysts’ expectations.

Analysts expected a 2.7% increase in the figure.

Total revenue for the four weeks ended Aug. 30 increased 9% to $765.3 million.

Year-to-date comp sales rose 3%. Total revenue climbed 6% to $5.83 billion.

●Gap Inc. said total comp store sales fell 2% over the four weeks that ended Aug. 30. Gap Inc. said revenue from Gap stores open over that time fell 6% which will pressure the brand’s profit margins in September.

The revenue metric slipped 2% for Banana Republic and rose 2% at Old Navy in August.

Gap said its total sales were unchanged at $1.23 billion.

●Buckle Inc. reported that its comparable store net sales for August increased 0.8%. Net sales increased 2.5 percent to $103.6 million from $101.1 million for the previous year 4-week fiscal period ended August 31, 2013.

Comparable store net sales year-to-date for the 30-week period decreased 0.4%. Net sales increased 1.3% to $611.0 million from $603.3 million, prior year

●In conjunction with its second quarter earnings, Zumiez released its sales results for August. The company reported comps growth of 2% for the month as against a growth of 3% registered in the year-ago period. Net sales in Aug 2014 rose 9.4% to $94.0 million compared with $85.9 million in the prior-year period.

The company attributed the increase to higher dollars per transaction that were marginally offset by a decline in comparable store transactions. Further, results for the month reflected the company’s investments toward its workforce as well as in developing a strong and seamless omnichannel presence to stage its brands. Outperforming categories in the month included juniors, men’s, hardgoods and accessories with positive comps, while footwear and boys categories posted negative comps.

●Cato Corp. reported sales for August of $63.6 million, a 7% increase over sales of $59.2 million for the four week period in 2013. Comp store sales in August were up 3% to the prior year.

Sales for the thirty weeks ended August 30, 2014 were $589.8 million, up 6% to sales of $555.8 million for the thirty weeks ended August 31, 2013.  The Company’s year-to-date same-store sales increased 3%.

“August same-store sales were above our expectations but consistent with our recent trend.  We remain cautious in regard to the remainder of the year,” said John Cato, chairman/president/ceo.

●Stein Mart Inc. Thursday reported that total sales for August were $86.5 million, a 3.8% percent increase over last year’s $83.3 million. Comparable store sales increased 2.5%.

Total sales were $713.5 million for the thirty-week period, up 2.6% from $695.6 million last year. Comparable store sales increased 2%

Geographically, Texas had the strongest sales in August, while the Gulf States were more challenged.

●Costco‘s August comp store sales were up 7%, which was much better than industry watchers had expected. Analysts had been looking for an increase of only 4.8%.

Domestic sales led the way, rising 7%, compared with 6% internationally.

Excluding the impact of lower gas prices and foreign currency fluctuations, global sales at stores open at least a year rose 8%. By that measure, sales rose 8% overseas and 7% in the U.S.

Revenue for the four weeks ended Aug. 31 increased 10% to $8.8 billion.

 

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