Less bad was more than good enough for retailers reporting September same-store sales Thursday as cooler weather combined with a later Labor Day, and perhaps even some pent-up demand, to give results a slight lift.
While declines still outnumbered gains, although by a smaller margin, many stores beat their own expectations and those of analysts. A number of companies boosted earnings projections for the third quarter and beyond even as they “anniversaried” the onset of the credit crisis. Aiding the quest for higher profits was a continuing emphasis on inventory control, which some experts fear could put fourth-quarter sales opportunities at risk.
According to a Goldman Sachs September same-store sales composite index, not only did retailers top estimates with a 0.2 percent decline versus a forecasted 2.7 percent drop, but all three retail segments beat projections. September’s showing was the best since a 0.1 percent advance in April.
Wall Street was impressed with the results. The S&P Retail Index rose 6.98 points, or 1.8 percent, to 386.86, its fourth consecutive day of increases, and the comp-store sales data also contributed to smaller gains for the Dow Jones Industrial Average, ahead 0.6 percent to 9,786.87, and the S&P 500, up 0.8 percent to 1,065.48. Adding to the atmosphere of a retail recovery, and to stocks’ upward motion, was a report from the Labor Department that jobless claims last week hit their lowest level since January and were down for the fourth time in five weeks.
Still, the prospects for recovery remain far from certain.
“It’s a pretty low bar at the moment. I hope we’re not all kissing frogs here,” said Alix Partners LLC managing director Matt Katz. “Things are currently improving, but the question is, relative to what?”
Considering last year’s financial fallout, comp-store sales will continue to progress, Katz pointed out, but he expressed concern over apparel sales, with department and specialty stores affected the most.
Until unemployment begins to stabilize, consumers will continue to shop at value-oriented chains such as discounters, drugstores and club stores, he said. “I do not think the macroeconomics are aligned yet.”
In a Retail Forward survey conducted in September, consumers said they would keep their spending plans restrained for the month ahead, as well as for holiday.
“September’s numbers are a good sign that retail sales are on a path to recovery,” said Retail Forward senior economist Frank Badillo. “But it will be a slow, bumpy road as shoppers are cautious about easing the grip on their spending plans. It will take more time for sales declines to turn into gains for all retailers, and not all of them will benefit equally.”
This was evident among upscale department stores Saks Inc. and Neiman Marcus Inc., where declines moderated to 11.6 percent and 17.6 percent, respectively. Nordstrom Inc. topped estimates with a 2.4 percent dip.
While the upper tier struggled, the value channel continued to excel. Same-store sales at mass merchants tracked by WWD rose 2.9 percent, significantly better than September 2008’s 0.6 percent decline.
Off-pricers continued to lead the pack. Ross Stores Inc. boasted the segment’s best results, as the discounter reported an 8 percent gain for the month and lifted third-quarter earnings projections to 75 cents to 77 cents a diluted share, up from 44 cents, and fourth-quarter earnings per share of 88 cents to 94 cents. The TJX. Cos. Inc. posted a 7 percent increase for September and revised its third-quarter outlook to 71 cents to 74 cents a share versus 58 cents a share. Fourth-quarter EPS is expected to be in the range of 60 cents to 66 cents, up from 58 cents.
According to Lazard Capital retail analyst Todd Slater, “Although channel inventory is lean, TJX does not appear to be noticeably lacking any high-quality brands and merchandise. Further, an economic upturn should drive higher discretionary purchases, and with ‘value’ becoming a sustaining paradigm, TJX’s newly acquired customers should stick.”
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews
@prada is introducing a new project at its men’s fall 2018 show this Sunday: “Prada Invites.” The fashion house invited four celebrated creative minds – @ronanaerwanbouroullec, Konstantin Grcic, @herzogdemeuron and @rem.koolhaas – to each create a unique item with its iconic nylon material. The designs will be unveiled on the runway show, which will take place at the company’s warehouse in Viale Ortles 25. #wwdfashion #mfwm (📷: @martinocarrera)
@kering_official is spinning off its stake in puma in an effort to focus on its luxury brands, the brand operator announced yesterday. “We are proud to have supported the turnaround of Puma, which now has unrivaled capabilities to take full advantage of the specific dynamics of its global markets and is poised to achieve substantial growth,” said François-Henri Pinault, Kering’s chief executive officer and chairman. Artémis will become a “long-term strategic shareholder” of Puma with a 29 percent stake. #wwdnews #wwdfashion (📷: @jilliansollazzo)
The fashion world mourns for celebrated street style photographer, Nabile Quenum, who died at age 32 in Paris.
Quenum, creator of the fashion blog “J’ai Perdu Ma Veste,” was a fashion week fixture, and regularly shot for New York magazine’s The Cut, among other outlets, and brands such as Louis Vuitton, Moncler and Adidas. He was also actively involved in the #NoFreePhotos initiative, which kicked off in the fall. Read more about Quenum in @kbsmoke's story on WWD.com. #wwdnews
@verwanggang and @maisonladuree have teamed up on a dessert collab called Vera Wang Pour Ladurée. The collection, which launched this week, features a specialty macaroon, as well as a wedding cake inspired by one of the designer’s gowns. “I could not imagine a more delicate or sophisticated creation to grace any couple’s celebration,” said Wang. #wwdfashion