Teen retailers pace Sept. gains in same-store sales

By Reuters
Posted Oct. 7, 2010 at 8:55 a.m.

Teen apparel retailers led generally stronger-than-expected same-store sales in September, with a late start to the back-to-school season helping those chains beat Wall Street forecasts.

Department stores and luxury chains also posted forecast-beating results, though retail experts warn the gains could be short-lived as consumers draw up budgets for the holiday shopping season.

“It was a late back-to-school season that started slowly while shoppers waited for discounts,” said David Bassuk, managing director at AlixPartners’ global retail practice. “And it looks like they’ll do the same for the holidays.”

U.S. same-store sales rose 2.8 percent, according to Thomson Reuters data which tracks 28 top chains, beating analysts’ estimates for a 2.1 percent increase. It was the 13th straight month of sales gains.

Apparel chains appealing to young shoppers such as Abercrombie & Fitch, The Buckle and Zumiez were among the best performers.

Department store chains J.C. Penney Co. and Macy’s Inc. also beat forecasts. Both have benefited from exclusive merchandise lines.

Luxury retailer Neiman Marcus Group posted results that reflect high-end spending’s gradual recovery, with a jump of 4.7 percent. Nordstrom Inc. and Saks Inc. results handily beat Wall Street forecasts.

Victoria’s Secret parent Limited Brands posted a same-store sales rise of 12 percent, beating Wall Street forecasts of a 4.1 percent rise.

It also forecast October same-store sales would rise in the mid-single digit percentages.

The early reports helped lift retail shares, with Limited up 3.7 percent and Abercrombie rising 8.3 percent.

But there were some pockets of weakness and signs that the momentum waned as September wore on.

“My impression is we are likely to see a decent sequential improvement from last year’s holiday (season) based on what is a decent sequential improvement in back-to-school,” said Sarah Henry, equity analyst at MFC Global Investment Management.

The International Council of Shopping Centers said it expects October same-store sales to rise 2.5 percent to 3 percent.

Retailers such as Gap Inc. and discounter Target Corp. missed the mark. Target said that sales softened as the month progressed. Kohl’s Corp also posted lower-than-expected gains.

“It was a back-to-school buying bubble,” said KeyBanc Capital Markets analyst Ed Yruma.

Last week, the Thomson Reuters/University of Michigan Surveys of Consumers showed consumer sentiment remained at its weakest level in more than a year due to economic worries among upper-income families.

U.S. private employers unexpectedly shed jobs in September, adding to consumer anxiety about high unemployment. Shoppers say they are still buying with caution.

“I hit the sale rack first,” said Fayola Romano, a medical receptionist from Brooklyn who was shopping Wednesday at a Macy’s store in Manhattan.

“I think I’m going to wait until the season gets closer, and then figure out if I am going to shop as much,” she said of her holiday spending plans.

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