Gap Inc.’s Old Navy brand and Zumiez Inc. on Thursday wrapped up the November comparable-sales package with a cheery decorative bow.
Reporting last — after the close of the equity markets — among the small sample of stores that continue to disclose monthly sales, Gap posted a collective 6 percent comp increase for the month, highlighted by the Old Navy brand’s eye-popping 18 percent leap. Gap brand was off 4 percent for the month, and Banana Republic saw a 2 percent increase, but the corporate results and those for the three brands all landed in a better position than the analysts’ estimates carried by Thomson Reuters.
Gap Inc. was expected to post a 1.4 percent comp decline, with Old Navy up just 1.3 percent, Banana Republic up 0.3 percent and Gap down 4.2 percent.
Commenting on the results, Stifel Nicolaus analyst Richard Jaffe called Old Navy “a significant market share gainer during November and the peak Black Friday weekend.” Despite lingering weakness at the Gap brand, “the company is managing the division’s costs and margins well….We anticipate that Old Navy and Banana will continue to outperform during the holiday selling season, but results will be held back by the weak Gap division.”
Meanwhile, Zumiez, which reported November sales along with third-quarter earnings that rose more than expected, checked in with a 6.3 percent gain, more than twice the 2.7 percent increase expected.
The numbers provided what seemed to be a fitting finish to a day for which all the broadline and apparel retailers reported figures that exceeded expectations, beginning with Costco Wholesale Corp.’s 9 percent gain, excluding fuel sales, and L Brands Inc.’s 8 percent increase, which included an 8 percent jump in same-store sales at Victoria’s Secret and an 11 percent advance at Bath & Body Works, the second-largest increase of the day by a single brand.
Besides the Gap brand, the only decrease reported for the month came from The Buckle Inc., which, at 1 percent, was better than the expected 1.3 percent retreat.
Thomson Reuters’ composite estimate was for a mean increase of 3.4 percent for the month, but the reported figures translated into a 5 percent increase. The mean increase for apparel stores was 6.5 percent, which rose to 7.1 percent when Gap’s figures were excluded.
Despite the small size of the comp sample, the results supported the narrative that, with stores leaving as little to chance as possible, promotions are proliferating throughout the month, making Black Friday and the hours available for shopping on Thanksgiving Day less of a factor than conventional wisdom might suggest.
Still, L Brands was quick to point out that Victoria’s Secret and Bath & Body Works both enjoyed “record Black Friday results.”
Costco noted in its report that its softline businesses were up in the mid- to high-single digits in November, with noteworthy strength in apparel, domestics and home furnishings. Corresponding with continuing reports of strength at warehouse clubs, Charles Grom, analyst at Sterne Agee, noted that Costco’s strong comp performance was “driven by a 5.1 percent increase in traffic, the company’s largest increase since March.”
The strong numbers notwithstanding, retailers emerged from the first month of the holiday season with their traditional fourth-quarter optimism very much in check. Cato Corp. was among the stores surpassing expectations, registering a 7 percent gain versus an anticipated increase of 2 percent.
“We remain cautious for the rest of the holiday shopping season and fourth quarter,” said John Cato, chairman, president and chief executive officer.