GAP, TALBOTS, WAL-MART GAIN IN AUG.
Byline: Diane E. Picard
NEW YORK — August brought mixed results for retailers, with chains such as Gap, Talbots, Kmart and Wal-Mart reporting strong back-to-school sales while others failed to make the grade.
Saks Holdings Inc. continued what has been seen as a disappointing trend. Comp-store sales inched ahead only 0.8 percent. Ann Taylor’s same-store sales slumped 22.1 percent, a performance that was called “clearly disappointing” by the company’s chairman.
Not surprisingly, junior-focused chains earned high marks during the critical back-to-school month. The Buckle reported a 21.3 percent comp-store gain, Pacific Sunwear of California logged a 13.3 percent increase, and American Eagle Outfitters Inc. surged 37.1 percent.
Even The Limited’s troubled Express division reported a 3 percent gain in same-store sales, but the rise was attributed to several promotions.
Many retailers reported a favorable consumer response to fall fashion, with strength in branded and private label jeans, cosmetics, intimate apparel and casual and career sportswear.
New York’s tax exemption for the first week of September hasn’t hurt either.
“It’s been a positive thing, but it is not as strong as January 1997, when the spending cap was much higher,” said Steven Kernkraut, a retail analyst at Bear Stearns. This year, the tax exemption applies to items priced $100 or less, while in January it applied to items priced up to $500.
He noted that the tax break should benefit Federated Department Stores, given the company’s strong presence in the state with Macy’s, Bloomingdale’s and Stern’s stores.
Kernkraut said much of the strength in the month was due to solid fall apparel offerings and continued high consumer confidence.
“Many people start purchasing fall apparel at this time of year, and fall fashion has generated a lot of interest overall,” he said.
Kim Walin, a retail analyst at Furman Selz, said sales were solid, adding that the momentum generated during the second half of August should continue through the rest of the year.
“It’s a supportive environment, and retailers entered the third quarter with clean inventories,” she said.
Traditional specialty chains led the pack. Talbots reported a 13.2 percent gain in same-store sales. Business benefited from strong sell-throughs of remaining spring and selected transitional sale merchandise, Arnold B. Zetcher, president and chief executive officer, said in a statement.
Gap Stores comps jumped 16 percent. Gap reported a 21 percent gain in same-store sales, while Old Navy and Banana Republic each reported a 12 percent improvement, according to Kernkraut. Gap does not release sales results for its divisions. Gap stock closed at 48 15/16, down 1 1/16 on the New York Stock Exchange.
Total same-store sales were up 5 percent at the Limited. In a conference call, Limited said the Express division reported a 3 percent gain in same-store sales, which was attributed to several direct mail promotions.
However, the company warned that the gain was not indicative of future results. Express is expected to report double-digit declines in same-store sales in September, according to the company.
This is in keeping with Express’s recent trend. In July, same-store sales at the chain declined 20 percent.
Lane Bryant’s same-store sales were ahead 6 percent, and Limited stores saw a 2 percent rise. Lerner New York comps dipped 2 percent, and Henri Bendel comps slumped 23 percent, despite the introduction of a new private label collection.
However, Limited said it is comfortable with First Call’s third-quarter estimates of 16 cents a share.
At Intimate Brands, which Wednesday reported a 7 percent gain in same-store sales, Victoria’s Secret Stores comps advanced 4 percent, led by the relaunch of the Angels line. Back-to-school sales pushed Bath & Body Works to a 13 percent comp-store gain, and Cacique comps rose 6 percent.
Kohl’s, a department store chain based in Menomonee Falls, Wis., advanced 17.5 percent, with solid gains from back-to-school business.
However, there were some disappointments. Ann Taylor’s same-store sales slumped 22.1 percent.
J. Patrick Spainhour, chairman, noted that the company’s strategy of “appealing to the full-price, career-oriented customer had the unintended consequence of disappointing the item-driven customer segment of our business and affected our ability to capitalize on back-to-school traffic.”
Spainhour said that despite the weak sales trend in August, there were encouraging signs in the business during the month. Average transaction values were up, and suits, shoes, leather and suede merchandise showed strength.
Ann Taylor stock slumped 15/16 to 14 15/16 on the New York Stock Exchange Thursday. Two luxury retailers also showed lackluster sales results. Saks executives tried to put a positive spin on the meager 0.8 percent same-store sales increase for Saks Holdings Inc.
“Our sales results for the month come on top of a strong 11.9 percent increase for the same period last year,” Phillip B. Miller, chairman and chief executive officer, said in a statement. “These results reflect our transition from spring bridge merchandise to fall and a continued strong demand for designer and luxury merchandise.”
A Saks spokeswoman noted that strength was seen in fine jewelry, intimate apparel and cosmetics.
Neiman Marcus Group comps inched ahead 1.6 percent. A spokesman noted that NM Direct sales were down significantly, reflecting the effect of the United Parcel Service strike. Part of the decline was due to reduced order rates, and part was due to delayed shipments, a spokesman said, adding, “We should get this business back in September.”
Same-store sales at Neiman Marcus stores were “a tad behind plan,” he said, but gained strength at the end of the month. Bergdorf Goodman had a comp-store gain in the mid-teens.
Off-price chains fared well during the month. TJX Cos. comps were ahead 11 percent, exceeding expectations. Filene’s Basement comps rose 6 percent. Ross Stores reported a 13 percent improvement in same-store sales, and Dress Barn had a 4 percent gain.
Sears, Roebuck & Co. comps advanced 2.8 percent, led by bright spots such as Levi’s and the private label jeans brand, Canyon River Blues.
“Continued strong performance in our entire apparel category was led by double-digit growth in women’s ready-to-wear, and cosmetics and fragrances,” said Arthur C. Martinez, chairman and chief executive officer, in a statement.
A Sears spokeswoman noted that gains were led by all apparel areas, especially junior sweaters, woven tops and jeans such as Canyon River fit-and-flare corduroys and novelty denim and misses’ sportswear.
Dayton Hudson Corp.’s total same-store sales increased 6.1 percent. At Target, comps rose 8 percent. Mervyn’s same-store sales increased 0.1 percent, while the department stores had a comp-store gain of 4.5 percent.
Bob Ulrich, chairman and chief executive officer, noted that Target and the department store division turned in “above plan” performances, while Mervyn’s sales were “slightly below plan.”
A company spokeswoman said apparel sales were strong at all divisions.
May Department Stores comps rose 6.3 percent, but J.C. Penney’s same-store sales dipped 1 percent.
Federated Department Stores logged a same-store sales increase of 3.5 percent, slightly ahead of the company’s plan of 3 percent.
Carson Pirie Scott & Co. comps were ahead 5.6 percent, with strong gains in women’s sportswear and back-to-school-related gains in juniors and children’s, Stanton J. Bluestone, chairman, said in a statement.
At Mercantile Stores Co., same-store sales dipped 0.9 percent but were slightly ahead of plan, the result of a promotional event.
Proffitt’s same-store sales, excluding the Parisian chain, were up 7 percent. By division, Proffitt’s stores comps rose 9 percent; McRae’s, 4 percent; Younkers, 7 percent, and Herberger’s, 10 percent, while Parisian comps dipped 1 percent.
Kmart’s same-store sales gained 6.4 percent. This was “on plan, with particular strength in the children’s apparel,” Floyd Hall, chairman, president and chief executive officer, said in a statement. He also noted that there was strength in cosmetics and intimate apparel.
Wal-Mart comps were ahead 7.1 percent, with the discount stores up 7.7 percent and Sam’s Clubs ahead 5 percent. Results at both divisions topped plan.
There were some disappointing results among specialty retailers including United Retail Group, which showed a 4 percent decline in comps. Designs Inc. was down 13 percent, and Gantos slid 22 percent. Woolworth comps fell 8.2 percent.
But strong performances were seen at other specialty chains, including American Eagle Outfitters Inc., where same-store sales surged 37.1 percent. Braun’s Fashions Corp. had a same-store sales increase of 15 percent with strong orders for sweaters and knits.
Charming Shoppes’ same-store sales were up 6 percent, and Cato Corp. comps were ahead 3 percent. Catherine’s advanced 4.6 percent.