Retailers' September Sales Strong, Raising Holiday Hopes
07 October 2010 - 11:26PM
Dow Jones News
Back-to-school buying finally arrived, aided by plenty of
promotions, with September same-store sales coming in better than
expected and raising hopes for the holidays.
Teen retailers, most vulnerable to the fall season, are largely
surpassing expectations. But the strength is pretty much across the
board, suggesting that some pent up buying demand is being
released.
A number of the early reporters are raising third-quarter
guidance on the heels of their solid showing, including
surfwear-oriented Zumiez Inc. (ZUMZ) and women's apparel retailer
Cato Corp. (CATO).
Zumiez, whose same-store sales grew 17% when 12.4% was expected,
is part of a teen retail group that includes Hot Topic (HOTT),
which posted a 2.6% drop, when a 3.5% decline was projected; and
Wet Seal, whose sales declined 0.7% when analysts were expecting a
2.3% drop.
Among regional department stores, Stage Stores Inc. (SSI) saw
its September same-store sales rise 1.8%, when 1.5% was
expected.
Limited Brands Inc. (LTD), which counts adults and teens among
its shoppers, smashed through estimates, posting a 12% rise in
sales when 4.1% was expected. The company's Victoria's Secret unit
led the upsurge, posting 13% growth, followed closely by Bath &
Body Works at 11%.
The 28 retailers tracked by Thomson Reuters are expected to show
a 2.1% rise for September at stores open more than a year. Wal-Mart
Stores Inc. (WMT) is not included in the group.
Retailers as a group are up against the first positive
comparable store sales number in a year, when September 2009 showed
a 0.6% advance.
While the year-ago gain was small, there is still significance
in beating a positive number because it can supply a psychological
boost amid what is still a lot of downbeat sentiment, said Mike
Berry, director of industry research for the SpendingPulse unit of
MasterCard Inc. (MA). "Anything that can perhaps be viewed as
positive news can perhaps make a difference."
Still, "We're seeing a continuation of consumers buying close to
their needs, in this case back to school," Berry said.
And there was no change on the promotional front, with some
stores marking down already discounted merchandise toward the end
of the month.
"Consumers are remaining highly value-centric and purchasing
largely only with coupon in hand or because of special offers,"
said Thomas Filandro, retail analyst at Susquehanna Financial
Group.
Major chains have yet to report, but department store executives
telegraphed good things at conferences during September.
"Back-to-school was very good," said Terry Lundgren, chief
executive of Macy's Inc. (M) at a Goldman Sachs conference on Sept.
14.
Even later in the month, on Sept. 28, J.C. Penney Co.'s (JCP)
Myron Ullman said the company exceeded internal expectations for
back-to-school sales.
And, "Obviously, back-to-school is equivalent to holiday for the
'young businesses,' young men's, juniors and the kids businesses,"
Ullman said.
-By Karen Talley, Dow Jones Newswires; 212-416-2196;
karen.talley@dowjones.com
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