HOLDING LINE ON PRICE, STORES GET THE SPIRIT AFTER STRONG OCTOBER
Byline: Diane E. Picard / Alexandra Zissu
NEW YORK — The Grinch can take the rest of the year off.
That’s a retailer’s fervent wish, of course, and this year many factors do point toward a healthy holiday. They include a booming stock market, low unemployment and low inflation that helped many retailers rack up solid same-store sales gains in October.
As the month’s results emerged Thursday, the fact that the comparisons were against weak sales last year didn’t hurt either, but retail analysts preferred to focus on positives, like the nonpromotional environment, which bodes well for Christmas.
Among the shining stars in October were Ann Taylor Stores, which posted a 15.9 percent gain after bouncing back with a 15.5 percent increase in September, a month that was disappointing for most other retailers.
J.C. Penney Co. was another big winner, reporting a 13.1 percent same-store gain in October.
However, several divisions of The Limited suffered. At Express, sales were off 8 percent and missed plan. At Limited Stores, volume was down 2 percent, and at Henri Bendel, figures were off 15 percent. Lerner New York’s 21 percent comp-store gain and Limited Too’s 13 percent increase were insufficient to offset the weaker performance of the other Limited units.
Venture Stores posted one of the biggest same-store sales declines of the month: 28.2 percent. The company attributed the decrease to its repositioning strategy from discounter to value-oriented department store.
Because October is considered a leading indicator of the strength of holiday shopping trends, retail analysts were generally pleased with the results.
“Most people hit or exceeded their plans,” said Jeffrey Edelman, a retail analyst at Deutsche, Morgan, Grenfell. “I find that particularly encouraging, when it takes place in an environment with little promotional activity.
“There’s been a catalyst to get people into the stores buying at regular prices, whether that’s fashion or weather,” he said. “At the same time, durables are weakening. We’re probably looking at what could be the beginning of an apparel cycle.”
Peter Schaeffer, a retail analyst at Dillon Read, noted that good results in recent months should help support third-quarter earnings, but “so far November is not living up to October’s strength.”
But the five fewer shopping days between Thanksgiving and Christmas may actually help sales because the window of procrastination is dramatically lowered, Schaeffer said.
He also noted that sales gains in the latest month must be compared with results from the year-ago period, which was one of the worst months in more than two years.
Bob Buchanan, an analyst at NatWest Securities, said retailers are “getting good sales without the high levels of promotion a year ago.”
Buchanan noted that while credit card debt is above average, high personal debt is typically a consequence of good spirits and strong confidence.
Joe Levy, chief executive officer of Gottschalks, said he is confident about the holiday season based on August, September and October sales. For October, the chain’s comps jumped 12.4 percent.
Also posting a double-digit gain was Kohl’s Corp., which racked up a 15.7 percent same-store increase.
October results were more modest at Saks Fifth Avenue, where same-store sales in October rose 5.8 percent, well below the year-to-date trend of 12.3 percent.
October gains are typically led by strong outerwear and sportswear sales, and that was the case at Saks. A spokeswoman underscored strong performances in outerwear and cold weather accessories, cashmere sweaters, cosmetics, accessories, shoes and handbags. On Thursday, Saks’ stock fell 1/8 to 36 3/4 on the New York Stock Exchange.
At Penney’s, sales were led by jewelry, accessories and outerwear. Misses’ career apparel and the Jacqueline Ferrar line were also strong, according to a spokesman.
Same-store sales at Neiman Marcus Group rose 5.9 percent. A spokesman said sales were strong “across the board.”
Federated Department Stores reported total sales fell 1.6 percent but comps were ahead 4.9 percent. Federated explained that year-ago sales included all 82 Broadway Stores, but this year’s included only the 52 units that were converted to Federated nameplates.
At Mercantile Stores, comp-store sales were up 7.8 percent. May Department Stores gained 4.6 percent.
“Apparel continued its outstanding performance,” said Arthur C. Martinez, chairman and chief executive officer of Sears, Roebuck & Co., in a statement. The chain’s domestic same-store sales gained 5.3 percent.
Martinez singled out women’s ready-to-wear, including leather jackets, sweaters and jeans. Sales of children’s apparel showed double-digit increases as did cosmetics and fine jewelry.
Kmart said total general merchandise same-store sales inched ahead 1.6 percent, led by the consumables area, with added strength in children’s apparel and health and beauty aids. Hard lines were below plan.
Wal-Mart comps rose 4.2 percent. Its discount store same-store sales were up 3.7 percent and Sam’s Club was ahead 5.7 percent.
Dayton Hudson Corp. reported a 6 percent increase in same-store sales, but volume at Mervyn’s dipped 0.9 percent and the department stores’ comps slipped 0.4 percent.
The company’s Target chain reported a 9.6 percent gain.
A Target spokeswoman said women’s ready to wear and children’s apparel performed well. At Mervyn’s, children’s wear, careerwear and accessories were outstanding, and at the department stores, bridge sportswear and cashmere sweaters were strong during the month.
Dayton Hudson said it expected “very strong earnings” in the third quarter.
Ann Taylor, which might be in the early stages of a turnaround, said it expects third-quarter profits to be about two cents higher than the Wall Street estimates of 19 cents a share, excluding the charge related to Sally Frame Kasaks’s employment contract. Ann Taylor will release its third-quarter earnings on Nov. 19. Ann Taylor’s stock was unchanged Thursday at 19 1/2 on the NYSE.
The Talbots is beginning to reap the fruits of its merchandise enhancements. Same store sales were ahead 2.3 percent.
“Results from each of our key fall catalogs reflect the continued consumer acceptance of our merchandise changes,” Arnold B. Zetcher, president and chief executive officer, said in a statement. “Customer traffic in our misses’ and petites store remains a key challenge for us contrasted by our kids’ business, which reported a 14.6 percent comp-store increase for the month.”
The Limited’s comps were up 4 percent. The company said it expects income in the third quarter to be about 15 cents a share, excluding the gain on the sale of its Abercrombie & Fitch stock. In the year-ago quarter the Limited earned 10 cents.
The Limited’s stock sank 2 1/8 Thursday to close at 18 on the NYSE.
At Intimate Brands, 83 percent of which is owned by The Limited, same-store sales gained 10 percent, with Bath & Body Works up 7 percent, Victoria’s Secret Stores up 9 percent and Cacique up 5 percent. But Intimate Brands’ shares fell 3 1/2 to 16 1/2 as the company lowered its third-quarter earnings estimates to 11 cents a share, compared with Wall Street’s projected 12 cents. Intimate Brands earned 9 cents in 1995.
Spiegel’s Eddie Bauer chain’s same-store sales were up 4 percent. A spokesman cited strength in its new EB Tech line of outerwear and activewear. The company, however, logged a slight decline in its catalog business.
At Bon-Ton Stores, same-store sales were up 2 percent, with increases in shoes, coats, misses’ sportswear, accessories and intimate apparel, as a result of the ongoing realignment of the moderate to better mix and the new offerings from branded apparel vendors, said Michael L. Gleim, chief operating officer.
Proffitt’s total company same-store sales were ahead 3 percent. At Younkers, sales were down 4.2 percent, McRae’s was up 5 percent and the Proffitt’s stores were up 12 percent.
Sales at Carson Pirie Scott & Co. fell 7.2 percent.
Among regional discounters, Shopko Inc. posted a 3.7 percent gain in same-store sales. Ames was up 5.3 percent, Dollar General gained 3.8 percent, and Goody’s Family Clothing rose 20.5 percent.
Off-pricer TJX Cos. had a same-store gain of 9 percent. Results did not include Chadwick’s of Boston for either the current or year-ago periods. They did include Marshalls, which was acquired in November 1995.
“October sales were substantially ahead of expectations, continuing the trends we experienced throughout the third quarter,” said president Bernard Cammarata in a statement. “Geographically, sales were strong throughout the country and apparel sales continued to post healthy gains.”
Filene’s Basement comps slid 6 percent, Value City rose 3.3 percent and Dress Barn gained 8 percent.
NEW YORK — Spring’s soft mood is taking many forms. From overtly romantic gowns at Alexandra Lind to soft florals at Jussara Lee and looser silhouettes at Daryl K, there’s an easier feeling in the air this season.