--Vast majority of retailers beating expectations
--Back-to-school buying credited, in large part
--Target, Macy's, Nordstrom among standouts
By Karen Talley and Anna Prior
Retailers are delivering strong sales numbers for August,
boosted by back-to-school buying and consumers' penchant for
fashion, with Target Corp. (TGT), Macy's Inc. (M), Nordstrom Inc.
(JWN) and Gap Inc. (GPS) and among the standouts.
Target's same-store sales rose 4.2%, above the 3.1% that was
expected, with sales stronger in the second half of the month as
the weather cooled off in parts of the U.S. Customers "responded to
Target's broad assortment and compelling value for their
back-to-school and back-to-college shopping," Chief Executive Gregg
Steinhafel said.
Macy's same-store sales grew 5.1% when 3.6% was projected.
"Sales exceeded our expectations in August, and the strength was
broad-based across merchandise categories, geographies and
channels," Chief Executive Terry Lundgren said. Lundgren said he
was particularly pleased with back-to-school results in the
Millennial customer categories and improved performance in feminine
apparel. Men's apparel, home furnishings, beauty products, women's
shoes and handbags also continued to perform well, he said.
Nordstrom's same store sales leapt 21% when 11.1% was expected,
with its Anniversary Sale, part of which was moved into August,
aiding the boost. For months of July and August, which encompass
the entire sale, same-store sales rose 8.4%.
Gap Inc. posted a 9% increase in August same-store sales, when a
5.4% increase was expected. All three North American brands--Gap,
Banana Republic and Old Navy--reported growth, including a 12% rise
at Old Navy, while international same-store sales fell 2%, short of
the 0.6% growth expected. Chief Executive Glenn Murphy said the
company "drove strong back-to-school sales, particularly at Old
Navy."
Kohl's Corp. (KSS) same-store sales rose 3.4% when 1.9% was
expected. The August sales reflect "improvement in our merchandise
content, inventory levels and marketing strategies," Chief
Executive Kevin Mansell said. All regions and lines of business
reported higher sales for the month, with footwear, men's and
children's the best performing categories, the company said.
Limited Brands Inc. (LTD) reported same-store sales rose 8%,
almost twice the 4.2% that was projected and continued a streak of
outdistancing expectations. The retailer was helped by strong sales
at its Victoria's Secret chain, as it usually is.
Costco Wholesale Corp. (COST) posted a 6% rise in U.S.
same-store sales minus gasoline when 5% was expected.
The 17 retailers that report monthly same-store sales are
expected to show 4.1% growth, according to Thomson Reuters, a
figure it looks like they will surpass given the strong showings
that have already come in. The figure compares with 4.9% last
year.
Buckle Inc. (BKE) reported a 4.5% rise in same-store sales when
a 0.3% drop was expected. Fellow teen retailer Wet Seal Inc.
(WTSLA), which analysts said has been missing on fashion trends,
posted an 18.3% decline in same-store sales, when a 17% drop was
expected. Wet Seal said in a statement the results were in line
with its expectations and that since the start of August, the
company has returned to "fast fashion merchandising and has
included merchandising to a broader demographic."
Teen retailers are a good proxy for back-to-school spending, but
only a sampling of the group still report same-store sales on a
monthly basis so it is hard to get a true read. In general, teens
have been drifting toward fashion and lifestyle brands and away
from wardrobe basics. "It's a move to the branded surf, skate, and
street fashion and to key fashion looks, typified by the bright
palette and colored denim," said Richard Jaffe, retail analyst at
Stifel Nicolaus.
Average back-to-school spending for a person with school-age
children is projected to jump to $688 this year, according to a
National Retail Federation survey last month. That is up from $603
in last year's survey.
Aside from back-to-school buying, August same-store sales show
"there was a desire for newness as adults looked to refresh their
wardrobes," said Nancy Liu, retail strategist at Kurt Salmon.
Stage Stores Inc. (SSI), a regional department store chain which
operates stores in generally smaller locales in the U.S., reported
a comparable-store sales rise of 6.5%, more than twice expectations
for 3%. "Healthy back-to-school selling, strength in our missy and
other women's categories and strong full-price selling helped
produce our highest comparable-store sales increase for the month
of August since 2004," said Chief Executive Michael Glazer.
"We feel good about our merchandise assortments, inventory
levels and positive momentum heading into the important fall
season," Glazer said.
The strong showing comes despite word this week that consumer
confidence for August slumped to its lowest level of the year.
"Households continue to worry about a difficult job market, the
European debt crisis, the upcoming 'fiscal cliff,' and the
political wrangling in Washington and in the presidential
campaign," says Steven Wood, chief economist at Insight
Economics.
Write to Karen Talley at karen.talley@dowjones.com
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