Retailers posted mixed October same-store sales, with
teen-focused chains posting lower-than-expected sales, as the
industry gears up for the critical holiday season.
Teen retailers shares slumped on the news in premarket
trading.
But a handful of retailers reported better-than-expected
declines - including Stage Stores Inc. (SSI), Stein Mart Inc.
(SMRT) and Wet Seal Inc. (WTSLA). Gap Inc.'s (GPS) same-store sales
rose 4%, and the casual clothing retailer said it expects fiscal
third-quarter earnings above Wall Street's expectations.
October isn't typically a strong sales month for retailers -
proving a lull between back-to-school shopping and the holiday
season in the final two months. But pent-up demand and cooler
weather encouraged spending. And while discounting continues to be
a big draw for price-conscious consumers, inventory levels are much
leaner than a year ago - reducing the need for fire sales which
crushed margins last winter.
Additionally, retailers are facing significantly easier year-ago
comparisons, as last year, the industry posted a 4.1% decline in
October. Growth of about 2% was expected.
In an early sign of stabilization, Walgreen Co. (WAG) on Tuesday
reported same-store sales climbed 4.9% in October, following a
strong gain in September and showing the company is rebounding from
weakness earlier this year. But peer Rite Aid Corp. (RAD) said
same-store sales fell 0.5%. Rite Aid has been shutting stores and
trimming costs as it tries to turn around operations.
Discounters have been among the best performers during the
recession, but drug stores and apparel outlets were again expected
to outperform in October. BJ's Wholesale Club Inc. (BJ) posted a
3.7% gain excluding gasoline sales, while larger rival Costco
Wholesale Corp. (COST) posted a 3% increase on that basis in the
U.S., both below analysts' expectations. At Target Corp. (TGT),
sales dropped 0.1%.
Teen-apparel chains, especially Abercrombie & Fitch Co.
(ANF), were expected to be the weakest performers by sector, and
most reported even below those estimates.
Abercrombie, which finally began to shed its no-markdown mantra,
posted a 15% same-store-sales decrease in October. The company is
winding down its high-end Ruehl business and is pushing to expand
overseas as it struggles at home. Teen retailers posting higher
same-store sales included Buckle Inc. (BKE), up 4.3%, and
Aeropostale Inc. (ARO) rising 3%. But American Eagle Outfitters
Inc. (AEO), which was projected to report growth in October, saw
sales fall 5%.
Department stores showed a mixed performance, with Macy's Inc.
(M) and J.C. Penney Co. (JCP) down 0.8% and 4.5%, respectively,
both under expectations. Kohl's Corp. (KSS) also missed, reporting
sales rose 1.4%. But Nordstrom Inc. (JWN) posted a
better-than-anticipated jump.
Other downside surprises included Limited Brands Inc. (LTD) and
Zumiez Inc. (ZUMZ), reporting lower sales of 4% and 8.9%,
respectively.
-By John Kell, Dow Jones Newswires; 212-416-2480;
john.kell@dowjones.com