NEW YORK — Retailers reporting May comparable-store sales ahead of the pack on Wednesday found some sun in the last week of a generally cool, wet month.
Wal-Mart Stores Inc. and Chico’s FAS Inc. both turned out to be winners, with total comps rising 6.2 percent and 13.6 percent, respectively. Posting increases after the market closed, Hot Topic Inc. reported its comps rose 2.5 percent on positive results from all merchandise categories, while Nordstrom Inc. saw a 1.1 percent increase driven by accessories, cosmetics and women’s apparel.
American Eagle Outfitters Inc. digested a fashion misstep in its assortment of women’s tops with a 7.7 percent same-store sales decline.
Most other major retailers release comps today.
While Gap Inc. didn’t report sales, its shares received a boost from generally upbeat comments from Wall Street that saw the firm beating sales expectations for the month. The firm’s stock picked up 63 cents, or 4.3 percent, to close at $15.18 on the New York Stock Exchange Wednesday.
Shares of Wal-Mart advanced 96 cents, or 1.8 percent, to end the day at $54.96 while Chico’s was up $2.15, or 5.8 percent, to $39.35, and American Eagle inched ahead 35 cents, or 1.6 percent to $22.56.
Unaffected by their after-market sales release, shares of Nordstrom picked up 86 cents, or 3.7 percent, to $24.27. Hot Topic rose $1.16, or 4.5 percent, to $27.03 on the Nasdaq.
It was a good day for the broader markets, with the Dow Jones Industrial Average surging 108.96 points, or 1.1 percent, to close at 9,796.80. The Standard & Poor’s 500 inflated by 9.21 points, or 0.9 percent, to 1,049.90.
“It was a soft month, clearly, and the weather was very, very cold and rainy in much of the country,” observed A.G. Edwards & Sons analyst Robert Buchanan. “That last week was huge for a lot of people, and that’s going to be reflected in the numbers.”
He added some department stores ran promotions during the end of the month that coincided with the warmer climate and “probably really helped out.
“There’s still some pent-up demand,” he said, which should make for stronger warm-weather apparel sales to come in the first half of June.
Wal-Mart’s namesake division outperformed the total firm in May with a 6.8 percent comp advance. In a research note, Prudential Financial analyst Wayne Hood said the results were “better than we thought.”
While he had thought “cool and wet weather during the first three weeks of May could stall sales,” they managed to pick up “along with more normal weather during the final week of the month.”
In the final week, seasonal merchandise also improved, which Hood said could “bode well” for broadline retailers subject to a similar weather predicament. Wal-Mart now expects seasonal merchandise to meet plan for the quarter. “This uptick in seasonal sales could benefit other retailers,” he said, “particularly Target.”
Chico’s built its 13.6 percent same-store increase with a 10 percent uptick in the first half of the month, a mid-double-digit increase for the third week and a 20 percent charge in the fourth week. Chico’s strongest geographical regions included Cleveland, Los Angeles and most of Texas.
It was the consumer’s cool reaction to American Eagle’s fashion assortment as well as cool weather that pulled the firm’s comps down 7.7 percent in May. Same-store sales at the American Eagle division fell a milder 7.1 percent while the Bluenotes/Thriftys operation posted a 14.7 percent drop.
Chief financial officer Laura Weil, on a recorded conference call, said the American Eagle unit’s sales were “hampered by our limited assortment of romantic or peasant items in our women’s summer I assortment.”
She indicated, though, that the firm’s peasant problems may be behind them. “We are very pleased with the significant pickup in sales across all regions during the last week of May when our new summer II floor set arrived. Summer II is the most powerful women’s assortment this year and properly reflects the new fashion trends in women’s tops,” she said.
While she acknowledged sales and margins for the month were below plan, she noted, “Our women’s business is back on track with a fashion-right balanced assortment.” The firm’s outlook for June and July is positive.
UBS Warburg analyst Richard Jaffe also saw a rosier future for American Eagle. He reiterated his “buy” rating on the firm’s stock and noted, “An optimal time to buy these shares is in weakness following a fashion misstep.”
While Gap didn’t report sales Wednesday, Prudential analyst Stacy Pak said the firm “should be able to beat expectations for May sales, providing credence to the long-awaited turn.”
She upgraded her investment opinion on the firm to “buy” from “hold” with a target price of $18, up from $13. “The bottom line on the stock is we think positive news flow will push shares higher,” she said.
Pak added, “It’s hard for us to imagine the stock going down” when a new ceo or president of the Gap brand is announced. As reported, Millard Drexler plans to vacate his long-held position at the head of the specialty retail giant by the end of the year.”