--Retailers' August same-store sales rise 2.9%
--Costco is one bright spot with same-store sales rising 5%
--Gap, L Brands same-store sales miss expectations
(Adds final same-store sales figures, results from Gap and
Zumiez, and details throughout.)
By Anna Prior
Challenges persisted for apparel retailers in August as shoppers
continued to stay away from malls, though consumers appeared to be
opening their wallets for bigger-ticket items, such as furniture,
automobiles and building supplies.
Same-store sales--for the few companies that still report
monthly results--came in slightly below expectations, which had
been lowered in recent weeks thanks to a number of downbeat
forecasts.
A bright spot was Costco Wholesale Corp. (COST), which reported
August same-store sales rose 5%, excluding gasoline, compared to
the last year's August, 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.
Retailers' sales reports came a day after auto makers indicated
new car buyers snapped up vehicles last month at a pace not seen
since before the financial crisis, suggesting that consumers seem
willing to spend on a car, if not a new pair of jeans.
In addition to the auto sales data, Ken Perkins from Retail
Metrics noted the 31% jump in August same-store sales posted by
home-appliances retailer Conn's Inc. (CONN) on Thursday offers
further evidence of a shift in consumer spending away from apparel
and towards big-ticket items.
Plus, home-improvement-products retailers Home Depot Inc. (HD)
and Lowe's Cos. (LOW) last month reported solid second-quarter
results and raised their year views, continuing to benefit from an
improving housing market.
"The pent-up demand is in the home sector, so that's where some
of the money was going," said Barbara Kahn, director of the Jay H.
Baker Retailing Center at the University of Pennsylvania's Wharton
School.
Meanwhile, several retailers--including department stores like
Macy's Inc. (M) and Kohl's Corp. (KSS)--have lowered their
fiscal-year outlooks in recent weeks.
Those 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.
And given that a retailer's performance during the
back-to-school season is typically an indicator of holiday
performance, this year's sluggish August raises concerns about
apparel retailers' prospects for November and December.
The nine retailers tracked by Thomson Reuters reported 2.9%
growth in August same-store sales. This compares with analysts'
expectations for 3.2% growth and with 6.5% growth a year
earlier.
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) reported a 2% rise in August same-store sales,
shy of the 2.2% growth that was expected. Gap stores posted a 2%
rise versus the 2.8% estimate, while Banana Republic's same-store
sales grew 2%, compared with expectations for a 0.4% decline. Old
Navy recorded a 1% rise in same-store sales, while expectations
were for a 1.3% increase.
L Brands Inc. (LTD)--formerly Limited Brands--posted 2%
same-store sales growth last month, 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.
Among teen retailers, Zumiez Inc. (ZUMZ) reported a 3% rise in
same-store sales, just ahead of expectations for 2.5% growth.
Meanwhile, Buckle Inc. (BKE) recorded a 1% increase in same-store
sales, slightly topping expectations for 0.4% growth.
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.
Write to Anna Prior at anna.prior@wsj.com
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