A calendar shift for Labor Day coupled with a lackluster back-to-school shopping season made August comparable-store sales a challenge for several retailers facing tougher year-ago figures.
L Brands Inc. and Cato Corp. both posted strong comps with gains of 6 and 4 percent, respectively. Stein Mart and Buckle both reported declines of 1.4 and 3.3 percent, respectively.
L Brands said its Victoria Secret unit delivered a 6 percent same-store sales gain while Bath & Body Works rose 5 percent. Direct sales showed a 2 percent increase. Analysts had the company pegged to post a 2.5 percent comps increase.
At least one retailer was able to make the b-t-s season a win: Old Navy.
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After the market close Thursday, Gap Inc. reported a 2 percent comps decline, but the retailer’s Old Navy brand delivered a strong 6 percent gain for the month — which is on top of a 2 percent same-store sales increase in the prior year. The increase was ahead of Wall Street’s 3.8 percent estimate.
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Sabrina Simmons, chief financial officer of Gap Inc., said that Old Navy’s strong performance was “driven by a healthy back-to-school business.”
The Banana Republic brand had August sales that dropped 11 percent, which compares to a 2 percent decline in the prior year. Analysts were expecting a 2.3 percent decline, according to Thomson Reuters. The Gap brand’s comps fell 8 percent in August, which is on top of a 6 percent decline last year.
The retailer also reiterated that the Gap brand continues “to make progress on product improvement strategies with a focus on the brand’s hallmarks of fit, quality, femininity and optimism,” the company stated. “As a reminder, spring 2016 will be the first season that the brand’s new leadership team is able to influence fully.”
Regarding Banana Republic, August results reflect the “largest negative impact from the Labor Day holiday, given the tax-free shift benefit is small to the brand (since it’s generally back-to-school shopping),” the company said adding that “feedback has been positive on re-establishing better fashion and teams are making adjustments to successive flows.”
Cato’s increase was above the company’s own expectations, and strong results for the year-to-date are eroding the outlook for the second half. “August same-store sales were above our expectations and higher than our recent trend,” said John Cato, chairman, president and chief executive officer. “However, due to strong sales in the back half of last year, we remain cautious for the remainder of the year.”
Stein Mart was expected by analysts to post a 2.5 percent gain, according to Thomson Reuters. The 1.4 percent decline reflected Labor Day falling a week later this year. “August sales were impacted by the move of Labor Day to a week later in September this year and the shifting of events, including the Labor Day event moving from August to September,” the company said. “Geographically, Florida had the strongest sales with positive comps, while Texas and the West performed below the chain.”
Results at Buckle were worse than Wall Street’s estimate for a 2 percent decline. For the year-to-date period, Buckle’s comps are trending down 2.2 percent.
Warehouse club Costco Wholesale Corp. reported a 2 percent decline for the month with its international units delivering an 11 percent same-store sales decline.
Zumiez Inc. said it is reporting comps next week due to the Labor Day shift. Michael Niemira, principal and chief economist at the The Retail Economist LLC, said overall, the shift hurt August results. Conversely — on a positive note — the Labor Day shift will benefit September sales.
“However, recent negative year-over-year impacts from declining gasoline prices and foreign exchange comparisons will continue to be a drag on retailers’ reported sales,” Niemira said. “For September, comp-store sales are forecast to be between flat and up 1 percent compared with a 5 percent gain for September 2014.”