A lukewarm start to the back-to-school season led to underwhelming growth for August retail, but it would appear anxious retailers can exhale a bit after a surprisingly solid September marked the return of stronger BTS sales as young consumers wait until actually getting back to school before shopping for back-to-school. While some economists warned that heightened promotions and weak year-ago numbers inflated August comps, September results seem to have put that theory to rest at least for the moment.
Led by a resurging Teen Retailer segment that enjoyed an onrush of BTS shoppers, nearly three-quarters of reporting retailers exceeded expectations during the fiscal month of September. Consolidated comp store sales growth for September was 2.6%, according to the International Council of Shopping Centers, which tracks 32 major retail chains excluding Wal-Mart. The ICSC called the performance “modest,” as sales came in at the low end of the association’s projected growth range of between 2.5% and 4.0%.
Retail chains saw the BTS season come slightly later than it has in the past, with picky shoppers “scouting” for bargains in August and returning with checkbooks in hand in early September. Indeed, high-end apparel-dominated retailers like Macy’s (+4.8%), Nordstrom (+7.5%) Saks (+6.5%) handily exceeded expectations while mall-based Teen chains like Abercrombie & Fitch (+13.0%), American Eagle (+4.0%), Hot Topic (-2.6%) and Zumiez outperformed forecasts as well.
Of the reporting retailers tracked by Sports Executive Weekly each month, only three, or about 13% of the total, reported a same-store sales decline for fiscal September versus the year-ago period. This compares to a September 2009 that saw 16, or about 64% of the total, report year-over-year declines within a dismal buying environment that led into a heavily promotional holiday 2009. For September 2010, a heat wave on the West Coast and tropical storms during the back-end of the month stymied what could have been even more impressive sales results.
And Spirits Look High for Holiday 2010…
Still, most analysts expect retailers to recoup those lost sales once the weather cools down for good.
As cited by the ICSC, the September fiscal month for retailers was the third warmest September in more than 18 years and the warmest in five years, which came as a disappointment following a warmer-than-usual August that also cut into sales of Fall/Winter seasonal merchandise.
Economists and retailers hope a strong September represents a precursor for similar Holiday results, which have obviously struggled in recent years. A recent report by the ICSC suggests Holiday sales will see a low to mid-single digit uptick, although retailers are preparing to cater to a discount-demanding consumer. Holiday sales for 2009 were up 1.8% over a dismal 2008 season that fell during the depths of the recession.
The Teen Retailer segment saw a postponed spike that was spurred by young BTS shoppers returning to the mall. As noted, A&F (+13.0%), American Eagles (+4.0%), Hot Topic (-2.6%) Zumiez (+17.0%), Aeropostale (+3.0%) and Wet Seal (-0.7%) all exceeded expectations substantially while Gap (-2.0%) missed forecasts due to continued weakness from its Old Navy brand.
The Department Stores segment could be considered the big winner for the month as growth was reported by all retailers in the group. Once again, Macy’s (+4.8%) turned in stellar monthly results on continued strength from its new Madonna juniors line and its American Rag private brand. Macy’s Chairman and CEO Terry Lundgren said management was “very pleased” with BTS sales and noted that the retailer has seen favorable response from its recently-launched Kenneth Cole Reaction men’s sportswear brand and is optimistic about the upcoming launch of Sean John men’s sportswear. At Dillard’s (+3.0%), sales of shoes offset weakness from men’s apparel and accessories to drive comps past expectations while Stage Stores edged up 1.8% for the month, topping expectations on strength from cosmetics, footwear and men’s items. JC Penney (+5.1%) and Kohl’s (+3.3%) also turned in solid results, although Kohl’s narrowly missed expectations for the month.
For the Luxury sub-segment, it appears activity with the higher-end consumer continues to be on the upswing, as Nordstrom (+7.5%), Neiman Marcus (+4.7%) and Saks (+6.5%) all exceeded forecasts for the month.
For Discounters, comps remained relatively static on a month-over-month basis, although Target (+1.3%) fell short of estimates as clothing sales waned near the back end of the month. The high-end discounter is in the midst of a full-scale remodeling project to stock more food in order to attract shoppers who are “sticking to the basics” as the recession plays out. Management expects the remodeling program to conclude during October.
At Ross Stores (+2.0%), comps exceeded estimates despite warm weather that cut into clothing sales. Management subsequently upped guidance for the fiscal third quarter to a range of 94 cents to 96 cents per share from a previously issued guidance of between 79 cents and 83 cents per share. The TJX Cos. (+1.0%) rebounded to match expectations as the company continues to ride exceptional strength from its Marmaxx Group (TJ Maxx, Marshalls), which once again topped expectations. Management said sales would have been “even stronger if were not for the warm and wet weather during the last week of the month, which hurt sales in the Northeast and Mid-Atlantic.”
For Warehouse Clubs, BJs Wholesale (+1.5%) missed expectations on weakness from the Metro and New York Regions while Costco saw comps jump 5%, slightly topping predictions on strength from discretionary items like apparel.
Looking ahead, the ICSC expects year-over-year October comp store sales to increase between 2.5% and 3.0%.
The Buckle’s September Comps Up 3.0%…
The Buckle reported that September comparable store sales increased 3.0% in while total net sales increased 8.7% to $87.1 million compared to net sales of $80.1 million in the prior-year fiscal September.
On the men's side of the business, which represented approximately 38% of total sales for the month, sales were up about 11% but overall price points were down approximately 1% for the period. Positive categories on the men's side included denim, woven shirts, and accessories.
Women's total sales, which represented about 62.0% of total sales, were up approximately 7.5% versus the prior-year period. Positive categories on the women's side included denim, woven tops, accessories and footwear. Overall price points on the women's side of the business were up approximately 3%.
Accessory sales for the month increased approximately 28.5% in comparison to the prior-year month, while footwear sales increased approximately 6.5% for the period. Average accessory prices were up approximately 15% and average footwear price points were down approximately 3% for the fiscal month.
Zumiez’s September Comps Up 17%…
Zumiez reported comparable store sales increased 17.0% for the five-week period ended Oct. 2 compared to a 0.8% dip on comps during the year-ago period. Total sales increased 22.5% to $44.7 million for the month from $36.5 million in September last year. Comparable sales growth was driven by an increase in comparable store transactions. ZUMZ said that dollars per transactions were down due to a decrease in average unit retail and a decrease in units per transaction.
ZUMZ’s highest comping region was the South, which was up 22%, while stores in the Midwest comped up approximately 16% and stores in the West and Northeast comped up about 15% and 9%, respectively. The remaining increases coming from e-commerce sales.
The retailer updated guidance for Q3 and now expects EPS to be between 28 cents and 30 cents, up from previously issued guidance of between 25 cents and 27 cents. The guidance is predicated on a comparable sales stores increase for the four-week period ended Oct. 30in the mid-single-digit range, which would result in a low double-digit comp for the third quarter.