Retailers Are Showing Surprising Strength In August Sales
September 02 2010 - 7:38AM
Dow Jones News
Retailers' August same-store sales are coming in better than
expected in the early going, with companies like Costco Wholesale
Corp. (COST), Limited Inc. (LTD) and teen retailer Buckle Inc.
(BKE) beating modest expectations on easy year-ago comparisons.
Still, the biggest in the group, like Target Corp. (TGT) and
department stores like J.C. Penney Co. (JCP) have not yet been
heard from.
Those that have issued figures for the important back-to-school
buying month are beating estimates by considerable amounts in many
cases.
Costco Wholesale Corp. (COST) posted a 5% rise in same-store
sales when a 3.6% gain was expected. The warehouse club did even
better when factoring in higher prices at its gas pumps and gains
from stronger foreign currencies. On that basis, same-store sales
rose 7%, when analysts were looking for 4.2%. The retailer's
international operations were up 11%, compared with a 6% rise in
the U.S.
Limited Brands Inc. (LTD), which owned Victoria's Secret and
Bath & Body Works, posted a 10% rise in same-store sales when a
7.3% gain was projected.
Teen retailers, which were expected to be the most vulnerable to
missing projections are so far largely beating them, including
Buckle, Hot Topic Inc. (HOTT) and Zumiez Inc. (ZUMZ).
"Things have been so poor in terms of the economy and even the
stock market and that really pulled expectations down," said
Stephen Hoch, marketing professor at the University of
Pennsylvania's Wharton School. "Also, last year was a very bad
year, so that makes the numbers look that much better."
In essence, "We're treading water on the retail front, and it
was thought that we couldn't even do that," Hoch said.
All told, the 30 retailers tracked by Thomson Reuters are
expected to post same-store sales growth of 2.5% for August, after
a 2.9% drop last year and a 2.7% rise in July.
While none of the large department stores have been heard from,
a couple of regionals have missed numbers, including Stage Stores
Inc. (SSI) and Bon-Ton Stores.
Nonetheless, Stage Stores Chief Executive Andy Hall, commented,
"While today's macroeconomic environment has created a cautious
consumer sentiment, our back-to-school performance met our
expectations."
Bon-Ton was more restrained. Vice Chairman Tony Buccina said
August sales were impacted by the hottest weather in the retailer's
markets since 1995. Reduced levels of summer clearance inventory
further challenged sales, Buccina said. "Both of these factors, we
believe, suppressed back-to-school sales and early fall demand for
apparel."
Bon-Ton's best performing areas were intimate apparel, hard
home, shoes, cosmetics and jewelry. Weaker areas were outerwear,
juniors, children's, and ladies' and men's sportswear.
The month appears to have started off decently for big
retailers, with their comments generally upbeat early on. "Our
sales performance is right in-line" with August guidance, Target
Corp. (TGT) Chief Financial Officer Douglas Scovanner said on Aug.
18 during a conference call to discuss second quarter results. "The
start of back-to-school has been very encouraging," Macy's Chief
Financial Officer Karen Hoguet said on Aug. 11.
But a spate of factors led to muted expectations. Shoppers
received a spate of poor economic news during the month, weathered
extremely hot temperatures that took their minds off of the fall
school start, and knew they had an extra week to wait for sales
because Labor Day falls in September this year.
-By Karen Talley, Dow Jones Newswires; 212-416-2196;
karen.talley@dowjones.com
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