Back-to-school shoppers took advantage of discounts and tax holidays in some states to give retailers – particularly two based in central Ohio – surprising sales gains in August.
Columbus-based Limited Brands reported one of the best performances among apparel retailers, posting a 10percent increase in comparable-store sales in August. That’s far better than the 7.3percent increase expected by analysts surveyed by Thomson Reuters.
Limited Brands’ results were led by Victoria’s Secret, where same-store sales swung to a 15percent gain from a 5percent decline reported a year ago.
Investors reacted enthusiastically to the news, sending Limited Brands shares up more than 6percent yesterday.
Meanwhile, New Albany-based Abercrombie Clothing reported a 6percent increase in comparable-store sales; analysts had estimated a 5.9percent gain.
The company’s touted international strategy helped push results: Sales abroad soared 80percent in August. In addition, the company’s direct-to-consumer sales – chiefly online – increased by 43percent.
However, Abercrombie’s children’s chain, abercrombie kids, was a drag on earnings. Comparable-store sales decreased 9percent in August.
As it turns out, discounting helped drive Abercrombie’s business in the U.S.; the chain discounted some items as much as 40percent. That did not sit well with analysts, who early in August had voiced concern that high inventory levels would force clearance sales, which would squeeze profit margins.
That concern sent Abercrombie shares down 3.9percent yesterday.
Assessing the industry’s results, Ken Perkins, president of research firm RetailMetrics, said: “It’s a glimmer of hope that the numbers are coming in ahead of low expectations. But it took retailers being heavily promotional to bring shoppers in. There’s still serious concerns about the consumer’s ability to spend during the crucial November and December periods.”
According to a tally by the International Council of Shopping Centers, 31 retailers posted a 3.2percent increase in comparable-store sales in August, slightly better than the predicted 3percent rise. The figures are based on revenue at stores open at least a year, considered a key measurement of retailer health because it excludes the effects of stores that open or close during the year.
Among the retailers that beat expectations were Cincinnati-based Macy’s, Gap, Costco and J.C. Penney.
Those that fell short included Target and teen retailer Aeropostale.
Still, the retail data mask an underlying weakness in consumer spending because the numbers are being compared with declines a year ago. In fact, spending on many nonessentials, such as fashion, is lower than in 2008 and is where it was five years ago, according to MasterCard Advisors’ SpendingPulse, which tracks all transactions, including those by check.
Retailers aggressively promoted jeans and other fashions as they sought to lure jittery shoppers. Tax-free holidays in nearly 20states also helped attract customers.
Even so, “consumers are buying what they absolutely need and are being very careful about it,” said retail consultant Emanual Weintraub.
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