US retail sales for August rose strongly in a month traditionally dominated by deals and discounts in the Back-to-School season. Costco and L Brands …
US retail sales for August rose strongly in a month traditionally dominated by deals and discounts in the Back-to-School season. Costco and L Brands took the performance plaudits with better than expected sales last month while Gap sales surprisingly fell. The Thomson Reuters same-store sales index was up 5% in August, beating the 3.9% estimate and the 3.3% increase a year earlier. According to International Council of Shopping Centers (ICSC), US chain-store sales posting a strong gain of 5.2% on-year, while Johnson Redbook same-store sales index also rose 5.2%, following a 4.8% gain in July and a 5.3% gain in June.
“With the Back-to-School shopping season coming to a close, sales posted a very strong gain, with apparel stores closing out the month at their highest year-over-year gain in four months,” said ICSC spokesman Jesse Tron,
“It’s a great indicator that consumers are ready and willing to shop as the economy continues to improve. In fact, our Back-to-School survey showed that on average, consumers are spending more this season ($325) on school items than last year ($284),” he added.
For September, ICSC forecasts monthly comp sales will continue to grow, posting a healthy 4-5% gain.
For August, L Brands said its comp sales rose 5%, topping analysts’ estimate for a 2.7% increase. The growth was led by a 5% comps rise at Victoria’s Secret, which beat expectations for 3% growth. The company noted strength in the brand’s young adult Pink line, which had a Back-to-School focus during the month.
Meanwhile, the Bath & Body Works brand recorded a 4% comps increase, driven by strength in its signature collection, home fragrance and soap and sanitizer businesses. Analysts had expected growth of 3.5% for the month.
The group also noted the merchandise margin rate for August was flat compared with last year.
Costco, meanwhile, reported a 7% total sales increase in August to $63.6m, excluding gasoline, outstripping analysts’ estimates for 5.2% growth. Same-store sales were up 3%.
Top-performing categories included housewares, small appliances, and apparel.
Gap, however, posted a surprise 2% comp sales decline last month falling short of the 1.6% gain analysts had expected. Its shares fell 5.3% to $44.10 in after-hours trading Thursday.
Its signature brand saw a 6% comp sales decline and the retailer warned of further pressure on its margins in September. Its Banana Republic chain also posted a 2% comps decline, when both brands were expected to show slight increases.
The company credited positive momentum at Old Navy where comps edged up 2% but still missed the 3.4% growth analysts expected.
“We’re encouraged by the positive momentum at Old Navy, while focused on the necessary steps to drive improved performance across our portfolio of brands in the back half,” said CEO Glenn Murphy.
Analysts noted Thursday that Gap’s performance should improve in September, which marks the first time this year merchandise has been put together by both its design and merchandising teams.
Among teen retailers still reporting monthly comps, The Buckle said sales edged up 0.8%, missing analysts’ 1.2% view, as total sales increased 2.5% to $103.6m. Actions sports retailer Zumiez reported a 2% comps increase when 2.5% growth was expected.
Apparel retailer Stein Mart saw its August comp sales rise 2.5% with totals up 3.8% to $86.5m.
Geographically, Texas had the strongest sales in August, while the Gulf States were more challenged.
The Cato Corp, meanwhile, saw its comps rise 3% as totals came in 7% ahead to $63.6m.
“August same-store sales were above our expectations but consistent with our recent trend. We remain cautious in regard to the remainder of the year,” said CEO John Cato.