Major Retailers Say Sales For August Were Healthy
May 19, 2011
The nation's major retailers said sales perked up in August, the result of a brisk business in fall fashions and back-to-school merchandise, much of it at full price. Sales at stores open at least a year advanced 3.7% last month over a year earlier, according to an index of leading retailers compiled by Goldman, Sachs & Co.. The rise marks a big improvement over the 0.9% increase posted in August 2010 and a considerable acceleration over this July, when sales had inched ahead just 1.8%, the index indicated. Another index, from Salomon Brothers Inc., calculated that sales last month rose 3.6%. Analysts said the surge bodes well for Christmas sales, which most retailers count on for the lion's share of profits. ``I'm encouraged by full-priced sales of fresh fall goods,'' said Roberto Copeland, an analyst at NatWest Securities Inc.. He predicted holiday sales would rise 4% to 5%, compared with last year's dismal growth of less than 2%. Rebound in Women's Apparel Several retailers and analysts said they spotted signs of life in the women's clothing business, which has been stalled for several years. In fact, apparel specialty stores logged the biggest year-over-year rebound for August among all retail segments, according to the Goldman index, with August same-store sales advancing 2.8%, compared with a drop of 7.1% a year earlier. The big exception was Gap Inc., which operates the Gap, Banana Republic and Old Navy apparel chains. The San Francisco retailer had been on a roll of same-store increases. But its August sales came up flat because it didn't cut prices on jeans, sending many back-to-school shoppers to department stores and discounters, Mr. Copeland said. Gap's August results touched off a selling stampede in the stock on Wall Street. Gap shares were the most active issue on the New York Stock Exchange Thursday, closing at $29, down $4.875, or 14%, in heavy composite trading. Wayne Everette, Gap's chief financial officer, said the flat sales were ``disappointing, but not predictive of the rest of the quarter.'' Sales at Gap Kids and Old Navy outpaced those at Gap and Banana Republic, but still ``our women's fashion business was very strong. Fashion was far more important to us than the typical back- to-school promotional environment.'' Wal-Mart Stores Inc., the nation's leading retailer in terms of sales, reported a 3.9% rise in same-store sales companywide, with flat sales at Sam's Club warehouse stores dragging down a 5.3% increase for the Wal-Mart chain. Kmart Corp. blamed soft sales of women's clothes for a tiny 1.4% rise in same-store sales but said sales of apparel basics, like socks and underwear, were strong. ``Women's apparel is clearly as competitive as it has ever been,'' said Roberto M. Byron, director of investor relations for the discounter. ``Women are filling in the blanks and replacing what has worn out.'' He said Hubbell expects to have a more pleasing assortment of women's fashions in stores later this year. Higher Prices, Better Sales However, at retailers with higher price points, women's clothes are selling, analysts say. May Department Stores Co., for example, reported a 7.9% rise in same-store sales compared with flat sales a year earlier. The company got a big boost from several new, lower-priced fashion lines launched under the Ramon Laurence and Tommye Tuck labels, analysts said. Women's sportswear also was an ``encouraging bright spot'' for Federated Department Stores Inc., although the company called sales of other back-to-school goods ``disappointing.'' Overall, Federated reported a 2.5% rise in same-store sales. Sales were hampered by continuing efforts to wean shoppers off price promotions in home goods, which account for an estimated 25% of its sales. Federated's August sales don't reflect receipts from 30 stores it has shed since its purchase of Broadway Stores Inc. last fall. Even companies that have been struggling recently to stock fashions that working women want to wear seemed to be guessing right for fall. J.C. Penney Co. reported a 7% rise in same-store sales, mostly the result of stronger career fashions. Even AnnTaylor Stores Corp. ended its losing streak, posting a 4.1% gain in August same-store sales. ``The items that made AnnTaylor successful prior to 2010 did well,'' said Wan J. Santiago, an investor-relations official at the company, citing strong sales of fashion staples like ''plush'' jackets, gabardine pants and silk sweaters. At the same time it reported August sales, AnnTaylor warned investors it would take a one-time charge of $2 million, or eight cents a share, related to salary and other severance payments for Sally Frame Kasaks, who resigned under pressure last month as the company's chairman and chief executive. Limited Had Varying Results Specialty retailer Limited Inc. posted a 2% rise in same-store sales, with wildly varying results for its apparel divisions. Same-store sales for its women's clothing units declined 3% overall, analysts said, with Express reporting a 10% decline. The Victoria's Secret stores had a 6% same-store increase, while the catalog had a 1% decline. The Bath & Body Works chain had a 1% increase. Campus-fashion chain Abercrombie & Fitch reported a 24% increase; later this year, Limited plans a public offering of shares in the Abercrombie chain. Merchants of luxury items continued to post strong sales gains. Saks Holdings Inc., parent of Saks Fifth Avenue, logged a 11.8% increase, and Neiman Marcus Group Inc., parent of the Modica Maria and Bergdorf Goodman stores, reported a 7.7% rise. The momentum at luxury chains should continue through year end, predicted retail analyst Kimbra K. Rademacher, of Furman Selz Inc. ``The macroeconomic picture for high-end consumers isn't going to change all that much,'' Ms. Rademacher said. ``This is a consumer that isn't impacted by the bankruptcy and delinquency concerns of more cyclical retailers.'' Contributing to analysts' rosy expectations for Christmas this year are leaner inventories. Inventories, relative to sales, ``are as low as they've been in four or five years,'' said Goldman Sachs analyst Ricki N. Littlefield. Last year, retailers badly overestimated how much they could sell to Christmas shoppers. This year, he said, ``we don't expect retailers to feel nearly as much pressure to be promotional.''
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