Lousy weather across most of the U.S was not adverse enough for consumers hungry for fashion apparel, innerwear and swimwear, which helped boost May same-store sales — especially for specialty retailers.
As a result, Gap Inc. — bolstered by strong sales at Old Navy — L Brands Inc., The Buckle Inc. and Cato Corp. all posted better-than-expected results while department store retailers and warehouse clubs such as Stein Mart Inc. and Costco Wholesale Corp. either met analysts’ estimates or did worse than original forecasts.
Gap Inc.’s same-store sales for May declined 1 percent, which is better than the 2.4 percent drop analysts expected, according to Thomson Reuters. By brand, Gap was down 6 percent and Banana Republic down 5 percent. Old Navy rose 6 percent in the month, which compares to a 2 percent gain in the same month last year.
L Brands delivered a 5 percent comparable store sales increase for May while The Buckle’s comps rose 2.4 percent. L Brands was pegged by Thomson Reuters to post a 2.8 percent gain, while the consensus for The Buckle was for a 0.9 percent decline. Cato’s comps were flat for the month. Analysts expected a 1 percent decline for the retailer. Comparable store sales for Zumiez Inc. fell 2.2 percent in the month, which is well below the 1.8 percent gain analysts expected.
The Thomson Reuters Same Store Sales Index showed a 0.8 percent increase for the month, which compares to a 5.8 percent gain in the same month last year. The apparel sector alone had a 1.3 percent gain — outpacing other retail segments.
Amie Preston, chief investor relations officer at L Brands, said on a conference call to investors that margins were higher in the month than in the prior year, and “inventories per square foot ended the month down 4 percent versus last year.” Taken together, this shows the company was able to move spring merchandise through stores without significant markdowns.
Regarding Victoria’s Secret, Preston said “May began with our new and improved Bombshell collection and our Pink Racerback Bralette. May mid-month, we transitioned to our multi-way collection, which will continue until the start of our semiannual sale in mid-June, the timing of which is comparable to last year.”
Preston said Victoria’s Secret Direct suffered a 3 percent comps decline while Bath & Body Works had a 5 percent gain thanks to strong sales during Mother’s Day.
Missing analysts’ expectations were Stein Mart with a 1.9 percent gain, which fell below estimates for a 4 percent increase, and Rite Aid, which reported a same-store sales gain of 2.1 percent, compared with estimates for a 3 percent increase. Costco posted flat same-store sales for the month, in line with estimates.
Stein Mart said its stores in “Florida and the mid-Atlantic states had the strongest sales in May, while California and Texas, which hold 25 percent of our stores, had sales decreases. In California, cooler weather severely impacted traffic. Record rainfall and flooding unfavorably impacted sales in our major Texas markets.”
May Same-store Sales
Company: May Comps:
Old Navy Global +6.0%
L Brands +5.0%
Victoria’s Secret +5.0%
Bath & Body Works +5.0%
The Buckle +2.4%
Rite Aid +2.1%
Stein Mart +1.9%
Cato Corp. 0.0%
Costco Wholesale 0.0%
Gap Inc. -1.0%
Banana Republic Global -5.0%
Gap Global -6.0%