Clothing Discounters Offer a Retail Bright Spot
August 17 2017 - 7:27PM
Dow Jones News
By Austen Hufford and Ezequiel Minaya
Discount clothing sellers offered investors a rare alternative
Thursday to woes in the retail sector, saying bargain-hunting
customers are continuing to shop at value-focused stores.
Shares of Ross Stores Inc. and Gap Inc. -- boosted by its
discount brand Old Navy -- jumped in post-market trading Thursday
after they posted better-than-expected results.
Shares of Gap jumped 6.5%, undergirded by Old Navy, which was
the only global brand in the company to post growing same-store
sales for the quarter.
Shares of off-price clothing retailer Ross jumped 11% as it saw
advancing sales for its latest three-month period, supporting the
thinking that while online sellers like Amazon.com have hammered
away at traditional retailers, shoppers will still visit
brick-and-mortar stores to hunt through bins for deals.
"It's clear to us that the consumer continues to favor retailers
that offer compelling value," Ross Financial Head Michael Hartshorn
said on a call with analysts.
Gap Chief Executive Art Peck noted on his call that a majority
of the company's total business comes from the value segment,
including Old Navy and outlet stores. He said the company sees
opportunities to invest, particularly in the value space.
A number of other clothing retailers, especially mall-based
shops, have struggled in recent years. Shares of L Brands Inc.
dropped 3.6% Thursday after the parent of Victoria's Secret cut its
earnings forecast late Wednesday.
Same-store sales -- a closely watched metric that tracks sales
at established stores that haven't been recently opened or closed
-- at Ross climbed 4% from the same quarter a year before. At Old
Navy, same-store sales, which includes online sales, climbed 5%,
while the metric retreated 1% at the eponymous Gap brand and shrank
5% at Banana Republic.
Earlier this week, TJX Cos, the parent of the T.J. Maxx,
Marshalls and HomeGoods off-price chains, said sales excluding
newly opened or closed locations rose 3%, extending a string of
gains.
At Ross, revenue rose 7.9% to $3.43 billion in the latest
quarter as net earnings increased to $316.5 million from $281.9
million a year before. Earnings were 82 cents on a per-share basis,
up from 71 cents previously. Analysts polled by Thomson Reuters had
expected revenue of $3.37 billion on adjusted earnings per share of
77 cents.
Gap saw revenue fall 1.4% to $3.8 billion, but came in above
analysts' expectations of $3.77 billion. Profit increased to $271
million, or 68 cents a share, from $125 million, or 31 cents a
share a year before. Gap saw adjusted profit per share of 58 cents,
above the 52 cents analysts were expecting.
Write to Austen Hufford at austen.hufford@wsj.com and Ezequiel
Minaya at ezequiel.minaya@wsj.com
(END) Dow Jones Newswires
August 17, 2017 19:12 ET (23:12 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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