By Anna Prior
Retailers' difficulties generally persisted in August as
shoppers continued to stay away from the mall, though sales were
primarily as expected, following a reset of expectations for the
second half of the year thanks to a recent slew of downbeat
outlooks.
"We just heard from many retailers that reported quarterly
results last month, so there shouldn't be any big surprises," Cowen
& Co. retail analyst John Kernan said.
A list of retailers of all stripes--including office supply
stores like Staples Inc. (SPLS), big-box giants like Wal-Mart
Stores Inc. (WMT) and department stores like Macy's Inc.
(M)--lowered their fiscal-year outlooks after reporting
second-quarter results, while teen apparel retailers like
Abercrombie & Fitch Co. (ANF) guided for weak third quarters,
which include the month of August.
Retailers are facing several challenges as they move into the
end of the back-to-school season and start to rev up for the
all-important holiday period. Mall traffic remains weak,
promotional activity is still high, and apparel retailers in
particular are facing difficult comparisons following last year's
strong back-to-school season.
Meanwhile, consumers appear to be opening their wallets for
bigger ticket items, such as furniture, automobiles and building
supplies.
Ken Perkins from Retail Metrics noted the strong monthly sales
reported by auto makers Wednesday, along with the 31% jump in
August same-store sales posted by home-appliances retailer Conn's
Inc. (CONN) Thursday, offer further evidence of a shift in consumer
spending away from apparel and towards big-ticket items.
The nine retailers tracked by Thomson Reuters were expected to
show 3.2% growth in August same-store sales, or sales at stores
open more than a year, versus 6.5% growth a year earlier. So far,
seven of the companies have reported and posted 3% growth.
Many retailers, including the major department stores, have
stopped reporting monthly results over the past year, making it
more difficult to gauge the performance of the entire industry. Gap
Inc. (GPS) and teen retailer Zumiez Inc. (ZUMZ) are slated to
report after the market closes Thursday.
L Brands Inc. (LTD)--formerly Limited Brands--posted 2%
same-store sales growth last month, just missing expectations for
2.2% growth.
Of L Brands' units, Victoria's Secret reported a 3% increase in
same-store sales, topping expectations for a 1.7% increase. Growth
was due primarily to strength in bras and panties. Meanwhile, Bath
& Body Works reported 1% growth, below expectations for a 3.3%
increase, despite strength in the brand's home fragrance, and soap
and sanitizer businesses. And La Senza reported 8% same-store sales
growth for August, when 3.5% growth was expected.
A bright spot was Costco Wholesale Corp. (COST), which reported
August same-store sales rose 5%, excluding gasoline, beating
expectations for 3.5% growth. Among the stronger performing
categories were small appliances, apparel, jewelry, health and
beauty, and office, while same-store sales for consumer electronics
were slightly negative. Top-performing regions included the Texas,
the Midwest and the Southeast.
Regional discounter Fred's Inc.'s (FRED) same-store sales were
flat, in line with expectations. Sales were hurt by an unfavorable
calendar shift, Chief Executive Bruce Efird said, adding that
several departments still performed well, including pharmacy,
hometown auto and hardware, pet, lawn and garden, and most
consumable product departments.
Among teen retailers, Buckle Inc. (BKE) recorded a 1% increase
in same-store sales, slightly topping expectations for 0.4%
growth.
Write to Anna Prior at anna.prior@wsj.com
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