Retailers successfully battled promotional headwinds throughout December, leaving most with comparable-store sales results that exceeded expectations.
In addition to those reporting monthly comps, a number of retailers provided updates on their holiday businesses and these also beat analysts’ estimates. American Eagle Outfitters Inc. raised quarterly guidance after reporting a smaller-than-expected 2 percent decline in comps for November and December, and Aéropostale Inc. projected a smaller fourth-quarter loss after reporting a 9 percent decline in holiday comps.
Pacific Sunwear of California Inc. also brought down projections for its adjusted fourth-quarter loss — to a range of between 11 to 12 cents a share from earlier guidance of a loss of between 12 and 17 cents — after reporting a 9 percent spike in comps during the month of December.
Gary Schoenfeld, president and ceo, called it “an excellent holiday season with strong sales performance in both men’s and women’s and an estimated 400 to 500 basis-point improvement in gross margins.” He said the fourth quarter will mark its 12 consecutive period of positive comps.
Urban Outfitters Inc. said comparable sales in its retail segment rose 4 percent during the two-month holiday stretch, with its Anthropologie Group up 5 percent and its namesake brand, which has been working with comp declines in recent quarters, up 1 percent.
“This year’s holiday environment in the fashion apparel industry was more promotional than any I can recall,” said Richard Hayne, chief executive officer of Urban Outfitters. “Thus, I am pleased the company delivered record sales and positive retail segment comps at each of our brands.”
The reports of improvement in the teen sector helped lift their stocks. At 1 p.m., shares of Aéropostale had soared 22.6 percent to $2.77, PacSun’s were up 18.3 percent to $2.71 and Urban Outfitters was up 2.3 percent to $36.18. American Eagle, which had seen appreciation of its shares on expectation of improved results, saw its shares trade down 4.5 percent to $13.97. The S&P 500 was up 1.6 percent to 2,059.20 while its S&P 500 Retailing Industry Group subset rose 1 percent to 1,028.33.
Among the pack of regular monthly reporters, L Brands Inc. beat estimates with a 4 percent increase for December, with Victoria’s Secret ahead 3 percent. The expectations among analysts, according to Thomson Reuters, were for respective increases of 3.6 and 3.3 percent, respectively.
Costco Wholesale Corp. continued its strong run with overall comps for the month up 3 percent and U.S. comps excluding gasoline ahead 8 percent, above the 7.1 percent consensus estimate.
Reporting late Wednesday, Zumiez Inc. said December comps were up 8 percent, about twice the pace expected, and raised fourth-quarter profit guidance to a range of 75 to 77 cents a share, above previous guidance for EPS of between 69 and 72 cents. The Buckle Inc., expected to be up 0.1 percent for the month, instead turned in a 2.5 percent comp increase.
Stein Mart Inc. more than doubled anticipated results with a 5.8 percent increase for the month, and Cato Corp. also raised fourth-quarter guidance after reporting a 6 percent December increase.
Also providing holiday updates were Signet Jewelers Ltd., up 3.6 percent for the two-month holiday period, and Stage Stores Inc., which raised quarterly guidance after reporting a 6.5 percent increase in holiday comps.
Jay Schottenstein, interim ceo of American Eagle, said this holiday season was marked by “meaningful margin recovery…In December, we achieved positive comparable sales growth with fewer promotions, as customers responded well to our holiday assortment, as well as new spring arrivals. We expect to close the quarter with inventories in good shape. We look forward to delivering ongoing business improvements and returns to shareholders in 2015.”
Aéropostale ceo Julian Geiger said, “During the holiday period, we achieved higher margins than originally expected, while delivering comparable sales results that were consistent with our original guidance for the quarter. We continue to manage our inventory appropriately and expect to end the fourth quarter in a clean position.”
In its report on brick-and-mortar business in the broader retail market, RetailNext observed an uptick in business during the fourth and final weeks of the month and improvement in critical metrics over November.
Traffic declined 7.1 percent, versus an 11.4 percent decline in November, while sales were off 6.5 percent, better than November’s 11 percent decline. Transactions fell 6.7 percent, versus 11.7 percent in the preceding month, while conversion grew 0.3 percent from an 0.1 percent uptick in November.
Sales per shopper rose 0.5 percent, versus a 0.4 percent increase in November, while average transaction value was up 0.2 percent compared to a 0.9 percent gain.
“While the month as a whole faced a performance decline, the [two] days following the Christmas holiday showed a year-over-year increases in sales of 7.9 percent and traffic of 3.2 percent,” the company said.
The post-Christmas pick-up was consistent with other reports indicating that redemption of gift cards had driven more business to stores in the aftermath of the holiday.
Super Saturday, Dec. 20, was the best day for both sales and traffic while return levels peaked on Dec. 29.
Gap Inc. is scheduled to release December comp results after the close of the markets today.