High-end consumers got back to shopping with a vengeance in September, picking up luxury handbags and designer suits, as Neiman Marcus Group posted its sixth straight monthly increase in same-store sales, a gaudy 14.7 percent gain.
“It was a ‘wow’ month,” Eric Beder, retailing analyst with Northeast Securities, said. “The high-end consumer came back and NMG was prepared for it. It knocked the ball out of the park. I think right now it is proving to be the premier operator in the luxury sector.”
NMG led the strong results in the luxe sector, but stores at virtually every price point and fashion attitude logged in with stronger-than-expected results in September, with just about the only downside to the month’s stellar results being fear that they might tend to steal some dollars from retail sales in October.
Beder noted that NMG benefited not only from its own improved customer service, upgraded systems and strong fashion, but also from a more optimistic consumer who, encouraged by recent tax cuts, is more willing to buy. “They are spending like there is no tomorrow,” he said.
NMG’s comparable-store sales stood out in their strength, but Saks Fifth Avenue Enterprises comped up 1.2 percent on top of a tough year-ago comparison of an 11.8 percent gain. Nordstrom Inc. was able to boast a 7.7 percent same-store sales improvement.
Good news was widespread in the retail sector as many department stores posted either their first or their strongest comp increases in months. The Saks Department Store Group logged a 6 percent gain. Federated’s 3.2 percent increase in September was accompanied by an increase in its third-quarter projections for earnings per share — to between 30 and 33 cents from a range of between 25 and 30 cents. Joining it in upward revisions were specialty stores Pacific Sunwear, Hot Topic and Bebe.
Overall, the Goldman Sachs September monthly index of same-store sales fattened 5.9 percent, far better than the 1.1 percent reported last September and the 3.4 percent expected. Specialty stores carried the industry last month, as sales gained 8.2 percent, compared with a 0.4 percent decrease last year. Discounters increased by 6.6 percent, up from the 3.1 percent reported in 2002 and beating the 4.6 percent forecast. Department stores gained 2.8 percent, improving over the last year’s 3 percent drop and the 0.4 percent increase expected.At the same time, the National Retail Federation increased its outlook for full-year GAFS sales to a 4.1 percent increase, above the 3.5 percent forecast issued in July. GAFS sales include those from general merchandise, apparel, furniture, home furnishings, electronics and appliances, sporting goods, hobby, book and music stores.
“I think it looked fantastic,” Janet Hoffman, a partner at Accenture’s retail practice, said, noting the month benefitted from a solid back-to-school and the chilly weather later in the month. Questioning those who were skeptical about July and August’s momentum, Hoffman said, “When you look at September, clearly the momentum is continuing and it is a very positive sign. I think it will bode well throughout the the fall and holiday.”
Citing the superior results at high-end and sharply focused retail operations, she commented, “It is just a clear indication the fashion product is making it in the marketplace and we look for it to continue into next spring.”
Upbeat about the fashion currently in stores, Bear Stearns retail analyst Dana Telsey said the month was a rare instance in which seasonal supplies and demands coincided. “This is one of the only times when we had sweaters and outerwear in stock when people could wear them,” she said.
In addition, she said last month featured the discounters taking share from specialty retailers because of price and this month, some specialty stores reacted by becoming more promotional, indicating consumers still shop at price.
Telsey is forecasting a 3 to 3.5 percent gain for holiday, above last year’s 2 percent climb. An extra shopping day versus last year will help.
Dorothy Lakner, an analyst with CIBC World Markets, added the cooler weather was the saving grace for some retailers like Abercrombie & Fitch, who said on a prerecorded call that its comps improved significantly in week five, up in the low double-digits with all three of its businesses positive.
Still, observers cautioned it might be too soon for celebration as strong September results came, in all but a few cases, against weak results in last year’s month. Among 50 firms tallied by WWD, 35 had increases and 15 had decreases. However, in September 2002, only 17 had increases, while 32 were down and one was flat.Dawn Stoner, a specialty retailing analyst with Pacific Growth Equities, said: “In many cases the strength was driven by a pop in sales during week five, when cooler weather hit important markets in the Northeast, compared to warmer temperatures last year.”
In addition, she said August’s weakness may have provided at least some of September’s strength: “We saw a lot of consumers waiting and really holding off until they felt they needed the product. We clearly saw a big month-to-month acceleration, which usually signals a consumer feeling pinched in the pocketbook,” Stoner said.
Gap Inc.’s comps increased 13 percent, as Old Navy rose 16 percent; Gap, 13 percent, and Banana Republic, 12 percent. Strong customer response to fall merchandise and marketing bolstered traffic trends. Total company sales exceeded beginning-of-month expectations and overall merchandise margins improved over the prior year as markdowns declined and markdown margins rose.
Limited Brands said total company comps increased 8 percent and merchandise margins were down from last year due to heavy clearance at its apparel brands. Victoria’s Secret comps expanded 4 percent, driven by a strong bra sale, and Bath & Body Works’ comps brightened 3 percent.
The apparel group comps increased 13 percent, consisting of an 11 percent increase at Express and a 19 percent rally at Limited Stores. Results were driven by a successful mid-season clearance sale, which began on Sept. 25, and were modeled on those held by VS.
A solid back-to-school selling season helped teen retailers deliver increases above those of August and, in many cases, expectations.
It was another solid month at Pacific Sunwear, as overall comps rose 18.5 percent, with PacSun comps up 17.8 percent and Demo comps improving 24.2 percent. Young men’s, juniors’, footwear and accessories at both PacSun and Demo posted double-digit comp increases for the month.
Bebe said comps increased 7.1 percent. John Kyees, chief financial officer, said the contemporary retailer sold 11 percent more units on an average store basis and the average retail price was lower by 3 percent compared with last year.Hot Topic said comps rose 9 percent, with comps positive in each week of the month and in each geographic region. James McGinty, cfo, said on a call the sales increase reflected an 8 percent increase in the average number of transactions per store this September versus last year. By classification, he said music-licensed merchandise comps rose 16 percent; men’s was up 28 percent, and accessories was up 3 percent, offset by a 3 percent decrease in its women’s business due to weakness in street bottoms.
Although A&F said comps decreased 1 percent in September, the results reflected significant improvement from August. By business, Hollister continued to perform well with September comps up in the low-double digits and A&F negative in the mid-single digits, with women’s positive. Transactions per average store at A&F were down 10 percent with transaction value up 7 percent. At Hollister, both transactions per store and average transaction value were higher.
Women’s specialty retailers also increased over last year. Ann Taylor Stores said comps for the period increased 6.9 percent, as comps were up 0.8 percent for AT stores and 17.1 percent for Ann Taylor Loft. With a 0.6 percent comp increase, Talbots said it started its traditional mid-season sale event a week later than last year due to strong regular-price trends, lowering September comps by about 3 percentage points. That will help October same-store sales, it said.
Other specialty gainers include Aeropostale, 22 percent; Cache, 8 percent; Charming Shoppes, 5 percent, and Chico’s FAS, 22.2 percent. Those that lost ground include: American Eagle Outfitters, down 2.8 percent; Mothers Work, down 4.7 percent, and Wet Seal, down 10 percent.
It’s hardly a boom, but most major department stores got their comps back into positive territory in September.
Federated Department Stores Inc. had a most welcome September surprise, as comps grew 3.2 percent. The operator of the Macy’s and Bloomingdale’s nameplates, among others, had forecast same-store sales to decline 1 percent or to be flat at best.“We were especially encouraged by the strength of apparel sales across the company in September, at least partially reflecting the arrival of fall’s cooler temperatures in the eastern half of the country,” said ceo Terry Lundgren in a statement.
Like many retailers, however, Federated cautioned that the early cold weather could cannibalize October’s sales results. October comps are forecast to be flat to slightly ahead.
Although it’s still comping downward, May Department Stores Co. likewise saw improvement, if not growth, in its sales trend, registering a 0.3 percent drop last month. August’s comps fell 3.2 percent and those last September were off 6.2 percent. Excluding the 32 units of Lord & Taylor and other divisions being closed by the firm, same-store sales would have risen 0.4 percent.
J.C. Penney Co. Inc. saw its department stores comp up 0.7 percent, with b-t-s driving strong sales of girls’ apparel, as well as boys’ and young men’s, said the company on a pre-recorded call. Fashion jewelry also performed above the company average.
At Sears, Roebuck & Co., U.S. department stores registered a 3.2 percent same-store sales gain. Overall apparel comps increased in the high-single digits. Among the best performing softlines categories was women’s apparel, which grew in the low-single digits.
“Women’s ready-to-wear and men’s apparel posted significant gains, driven by strong performances by the Lands’ End and Covington brands,” said ceo Alan Lacy in a statement.
At Kohl’s Corp., same-store sales rose 5.5 percent. Although women’s apparel and accessories performed below company average, children’s, footwear and men’s apparel more than made up the difference, said the company on a pre-recorded call.
Dillard’s Inc. rode success in accessories, lingerie, men’s wear and shoes to post a 3 percent gain in same-store sales. Women’s wear, kids’ and juniors’ performed below average, said Dillard’s on a call, and cosmetics comps came in at company average.
Bon-Ton Stores Inc. said comps increased 2.7 percent, while Elder-Beerman Department Stores Corp., which is being acquired by Bon-Ton, comped up 2.9 percent.Decliners included Gottschalks Inc. (off 1.6 percent), Stage Stores (off 3.8 percent) and Target’s Mervyn’s division (off 10 percent).
Cooler weather during the last week of September allowed Wal-Mart Stores Inc.’s domestic doors to comp up 5.6 percent, better than the company’s forecast of 3 to 5 percent growth.
Wal-Mart said on a prerecorded call that the early cold weather moved October sales into last month, and that greater traffic accounted for about two-thirds of the same-store sales gain.
By merchandise category, girls’ and men’s apparel were among the bestsellers, while the Northeast and Midwest were the strongest performing regions.
With Sam’s Club chipping in a comp climb of 8.2 percent, total U.S. retail comps grew 6 percent. Wal-Mart projects October same-store sales to increase 3 to 5 percent.
Target Corp.’s stores likewise performed well, comping up 7.2 percent. Women’s apparel and children’s were among the stronger merchandise categories, said Target on a call. Although the firm’s Mervyn’s stores comped down 10 percent, that was partially offset by a 2.4 percent increase at Marshall Field’s which, when added to Target stores’ results, allowed consolidated comps to climb 5.4 percent. October same-store sales at Target stores are anticipated to increase 4 to 6 percent.
The major off-price retailers also enjoyed a robust response to their September wares.
At TJX Cos. Inc., comps grew 8 percent, beating the firm’s plan. “Apparel sales benefited by seasonably cool fall weather this year compared with unseasonably warm weather during the same month a year ago,” said ceo Edmond English in a statement. Last year, TJX comped down 1 percent.
Ross Stores Inc. registered a 5 percent same-store sales gain on top of last September’s 7 percent increase.
“The back-to-school businesses of juniors, children’s and shoes all posted high-single to double-digit same-store sales gains,” said ceo Michael Balmuth in a statement.Retail Ventures Inc., formerly known as Value City Department Stores Inc., said comps jumped 10.6 percent in September. By division, Value City’s same-stores sales grew 7.1 percent, Filene’s Basement comped up 13.9 percent and comps at Discount Shoe Warehouse gained 13.9 percent.
Left out of the upturn were ShopKo Stores Inc., which notched down 1.7 percent; Factory 2-U Stores Inc., which fell 5.6 percent; and Stein Mart Inc., which saw comps regress 3.3 percent.
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