Thanks to sales tax holidays in several states, weekly sales ticked up.
The Retail Economist-Goldman Sachs Weekly Chain Store Sales Index clocked a 0.2 percent increase over the prior week for the period ended August 8. The year-over-year gain was 3.1 percent.
Michael P. Niemira, chief economist of The Retail Economist LLC, said in a statement that the “later state sales-tax holidays in ten states this year compared with last year and the addition of one new state holding a tax holiday during the past week helped to boost the year-over-year pace of demand during the current past week.”
Niemira went on to say that those “state tax holidays for back-to-school spending tend to shift the incidence of the purchase, not so much the overall consumer spending magnitude for the back-to-school season.”
That shift in spending along with lackluster consumer spending on apparel during the back-to-school shopping season has triggered retailers to nudge up their promotional activities with markdowns of 20 to 60 percent off. But it is important to note that some companies such as American Eagle Outfitters have deployed “disciplined markdowns,” according to analysts aimed at keeping inventories lean while not eroding gross margins.
In the mass sector, Target Corp. was aggressively pushing b-t-s items in-store and online along with TV spots. Target.com spotlighted 20-percent off select college items, and 30 percent off children’s wear. Denim bottoms for kids were 40 percent off, and school supplies were 50 percent marked down.
Overall, it’s been a challenging market. The specialty apparel sector experienced a 0.9 percent average same-store sales decline for July, according to Thomson Reuters, with the teen segment posting a hefty 7.9 percent decrease.
On Monday, Gap Inc. reported its July comps and cited macroeconomic factors such as currency fluctuations and a lingering impact from the West Coast port shutdown. Regarding the latter, the dispute was settled earlier this year, but is still affecting many companies.
In a research note this morning, analysts from Telsey Advisory Group said that as Gap posted “weaker-than-expected comp results in the first two quarters of the year, we continue to look to spring 2016 as the ‘no excuses’ time frame for an improved product presentation at Gap and now Banana Republic as well.”
The analysts acknowledged that Gap’s management has “identified the issues that have led to disappointing results…the challenge remains to not only improve the product, but also to re-engage the core customer at both brands.” The analysts added that this will be difficult, and likely not doable through to at least early next year.
“The overall environment remains ever-more competitive with new market entrants, and Gap has conceded incremental share with its latest round of planned store closures,” the analysts said, adding that the firm maintains a “Market Perform” rating on the stock and our 12-month price target of $41.