By Anna Prior
Retailers reported better-than-expected sales in October as
discounts and promotions helped get shoppers into stores and
expectations were muted due to concerns about the partial U.S.
government shutdown at the beginning of the month.
"People were watching a dissolving quarter in September and were
nervous about whether it would continue into October," said Rebecca
Duval, a retail and apparel analyst at BlueFin Research Partners.
"The promotional levels were very high and that kind of worked in
terms of driving traffic."
Expectations were low for the apparel retailers, in particular,
as same-store sales missed estimates in the previous three months
and teen-retailer Abercrombie & Fitch Co. (ANF) issued a stark
warning earlier this week, reporting a 14% plunge in third-quarter
same-store sales.
But some retailers, like Buckle Inc. (BKE) and L Brands Inc.
(LTD), bucked that trend by posting growth on Thursday.
Even J.C. Penney Co. (JCP), which long ago stopped reporting
monthly metrics, sought to calm its investor base in reporting
same-store sales edged up 0.9% last month, its first monthly
increase since December 2011.
The eight retailers tracked by Thomson Reuters that have
reported sales so far posted a 3% increase in October same-store
sales, or sales at stores open at least a year, while Gap Inc.
(GPS) is slated to report after the market closes. Thomson Reuters
has projected the nine companies to post 2% growth, versus a 5.7%
increase a year earlier.
But many retailers, including the major department stores, have
stopped reporting monthly results, making it more difficult to
gauge the performance of the entire industry.
L Brands--formerly Limited Brands--reported same-store sales
jumped 8%, well above analysts' estimate of 2.2% growth, boosted by
a 10% rise in same-store sales for Victoria's Secret. The company
credited Victoria's Secret's performance to strength in its
lingerie and beauty segments, as well as its young-women-focused
Pink brand. However, it noted that merchandise margin rates were
down significantly amid a strong response to increased promotional
activity.
L Brands also noted it expects third-quarter earnings to come in
at the high end of its previous guidance.
Of L Brands' other units, Bath & Body Works sales grew 4%,
topping the expected 1.8% increase, while La Senza sales fell 2%,
compared with expectations for 2.5% growth.
Costco Wholesale Corp. (COST) posted a 5% increase, excluding
gasoline, topping expectations for 4.5% growth. Among the stronger
performing categories were garden, toys, office, small appliances,
jewelry and apparel, though the company noted a muted performance
in consumer electronics. Top-performing regions included the
Southeast, Midwest and Texas.
Regional discounter Fred's Inc.'s (FRED) same-store sales grew
0.8%, slightly above expectations for 0.7% growth. But Chief
Executive Bruce Efird said sales were at the lower end of the
company's guidance as poor weather around Halloween hurt sales and
consumers tightened spending during the recent budget crisis.
Mr. Efird also noted forecasts for the upcoming holiday season
project a "very tough retail environment," so Fred's has maintained
inventories at or below last year's levels.
Among teen retailers, Buckle reported a 2.6% increase in
same-store sales, beating expectations for a 1.7% decline.
Zumiez Inc. (ZUMZ), meanwhile, reported a 1.2% increase,
slightly below expectations for 1.7% growth. The youth-focused
action sports apparel, footwear and equipment retailer said the
categories posting growth included accessories, footwear, hard
goods, and juniors, while the company's men's and boy's segments
recorded lower same-store sales.
Write to Anna Prior at anna.prior@wsj.com
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