There just seems to be little good news at retail these days.
As the third-quarter numbers keep rolling out, retailers are all pretty much singing the same song: Bad results because of too-warm fall weather and few compelling reasons for consumers to go out and shop for apparel instead of spending money on dining out or a new car.
And many of them don’t expect things to get better in the fourth quarter.
There were exceptions, though, as value-conscious consumers found bargains at Ross Stores Inc. — helping to boost its results — and at Cato Corp., which has been positioning itself as a destination for value-driven shoppers. But an overly promotional environment in the fourth quarter could make it hard for even off-pricers to differentiate themselves.
All in all, results were mostly below analyst expectations.
The Bon-Ton Stores Inc. said its results were hurt by unseasonably warm weather and weak traffic trends as it reported a net loss of $34 million, or $1.72 a diluted share, for the third quarter ended Oct. 31. That was about triple the loss of $11 million, or 57 cents a share, in the year-ago quarter. Comparable-store sales decreased 2.6 percent in the last quarter and the gross margin rate decreased 286 basis points to 33.4 percent of net sales. Total sales in the quarter decreased 3 percent to $623.4 million, compared with $642.7 million in the third quarter of last year.
“Clearly, our third-quarter results were challenged as sales were pressured by unseasonably warm weather which significantly impacted our cold-weather classifications, and by the continued weakness in overall traffic trends,” said Kathryn Bufano, president and chief executive officer of the York, Pa., regional operator. However, Bufano said customers responded strongly to the company’s expanded branded offerings.
“Looking ahead, we are not anticipating major changes in the retail environment in the near term,” Bufano said. “Accordingly, we are pursuing a number of avenues to drive additional process improvements and further reduce expenses.”
The retailer is lowering capital spending and inventory levels and expecting to save $35 million in fiscal 2016. For fiscal 2015, Bon-Ton sees a loss of between $2.15 and $2.65 a diluted share and comparable-store sales declining 0.5 percent to 1.5 percent.
Also citing the negative impact of warmer weather, Stein Mart Inc. posted weaker sales in the third quarter as losses narrowed to 1 cent a share from 3 cents in the same period last year. The loss for the quarter came in at $197,000, which compares to $1.2 million last year. Sales for the quarter fell 1 percent to $300.7 million from $303.7 million last year. On an adjusted basis, net income came in at $593,000, or 1 cent a share, which compares to $947,000, or 2 cents, in the prior year.
Jay Stein, chief executive officer, said sales “were severely impacted by unseasonably warm weather. We are working to address our sales and promotional strategies for the fourth quarter to get back to more acceptable top-line results.”
For Stage Stores Inc., third-quarter losses widened and stores in communities tied to the oil and gas industry or exposed to the peso faltered. The Houston-based company, which has 847 doors in smaller markets, said net losses expanded to $10.2 million, or 32 cents a share, from $5.3 million, or 17 cents, a year earlier. Sales for the three months ended Oct. 31 fell 3.5 percent to $351.6 million from $364.2 million. Comparable-store sales also declined 3.5 percent.
“Our third-quarter results were negatively impacted by stores located in geographies which were pressured by oil and gas and a devalued peso,” said Michael Glazer, president and chief executive officer. “Stores outside of those areas achieved a flat comp for the quarter.”
The Buckle Inc. posted weak third-quarter earnings as sales slumped 4.1 percent, but the specialty apparel retailer is seeing stronger online sales for the quarter and year-to-date. The company said earnings fell 11.6 percent to $35.9 million, or 74 cents a share, from $40.6 million, or 84 cents, in the same period last year as sales dropped to $280.2 million from $292.2 million. The gross margin rate declined 188 basis points in the quarter to 41.85 percent.
Same-store sales for the quarter showed a fall of 5.2 percent. At the end of the quarter, the retailer operated 468 stores in 44 states, which compares to 461 stores in 44 states in the same period last year. In the most recent quarter, online sales rose 13.6 percent to $25.9 million. Year-to-date, online sales are up 14.4 percent to $70.2 million.
At Ross Stores, the retailer said third-quarter sales rose 7.1 percent to $2.78 billion from $2.6 billion last year with earnings rising 12 percent to $215.7 million, or 53 cents a share, from $192.7 million, or 46 cents. Same-store sales in the quarter rose 3 percent, which is on top of a 4 percent gain in the same period last year.
Barbara Rentler, ceo, said sales and earnings growth were better than expected. “These results demonstrate that customers continue to respond positively to the wide assortments of fresh and exciting bargains we offer throughout our stores,” Rentler said, adding a bit of caution for the fourth quarter, though.
“In the upcoming fourth quarter, we face challenging prior-year comparisons, ongoing uncertainty in the macro-economic environment, and a holiday season that will be highly promotional,” she said.
Meanwhile. the Cato Corp. saw a nearly 50 percent gain in profits in the third quarter as John Cato, chairman, president and ceo, cited “recently strong sales trends.” Net income gained 46.2 percent to $8.3 million, or 30 cents a share, from $5.7 million, or 20 cents, a year earlier. While part of those gains were attributable to a favorable tax adjustment, the company also logged a 4.4 percent rise in revenues, to $225.5 million from $216 million, for the three months ended Oct. 31.
The retailer sees fourth-quarter earnings per share at the lower end of its original guidance of 35 cents to 39 cents. The Charlotte, N.C.-based value retailer has 1,343 stores and is on track to open a total of 31 doors this year. That’s down from the prior estimate of 40, which the company attributed to “a lack of shopping center development and increased competition for available space.”