DOW JONES NEWSWIRES
Retailers are posting higher-than-expected September same-store
sales, even as analysts raised their estimates as the month came to
a close, with the outperformance potentially enough to end a
year-long streak of falling sales.
Victoria's Secret parent Limited Inc. (LTD) was among the upside
surprises, reporting its first same-store-sales increase since
August 2007.
Retailers have been suffering for more than a year as consumers
have continued to be less free with their spending. But starting in
September, comparisons with year-earlier results became notably
easier, increasing the near-term likelihood of year-over-year
growth gains.
If September ends up in the red, it would be the first time this
decade that the same month had two straight years of same-store
sales decline. An overall fall of about 1% was expected by
analysts, the smallest decline this year, though Labor Day falling
later on the calendar in 2009 helped last month's results.
Wall Street Strategies retail analyst Brian Sozzi said the
calendar shift, combined with "conducive weather for fall apparel
and accessories purchases, and dare I say modest interest in
discretionary buying in the West, will be the major themes when all
is said and done."
But while growth wouldn't signal the troubles are over, there
are reasons to be optimistic. Walgreen Co. (WAG) last week reported
higher nonpharmacy sales, with results handily topping analysts'
estimates, as expectations for September industrywide improved as
the month finished up. Family Dollar Inc. (FDO) on Wednesday
forecast 5% same-store-sales growth for the month.
Discounters had been among the best performers, but both drug
stores and apparel outlets were expected to outperform in
September. That is partially due to the effects of slumping
gasoline prices and currency changes on BJ's Wholesale Club Inc.
(BJ) and larger rival Costco Wholesale Corp. (COST). BJ's on
Thursday posted a 5.5% gain excluding gasoline sales, another month
of outpacing peers but below analysts' expectations. Costco on
Wednesday reported a 3% rise on that basis in the U.S., double
analysts' expectations.
Teen-apparel chains, especially Abercrombie & Fitch Co.
(ANF), were expected to be the weakest performers by sector, though
many topped analysts' expectations. That includes ailing
Abercrombie, which posted an 18% same-store-sales slump for
September. The company has recorded big declines for months as
price-conscious shoppers instead go to cheaper rivals like
Aeropostale Inc. (ARO). It had a 19% surge, prompting the company
to increase its fiscal third-quarter profit target. American Eagle
Outfitters Inc. (AEO) also projected earnings at or above its prior
forecast.
Department stores also showed improved performance, with Macy's
Inc. (M) posting an 2.3% drop - half of what analysts anticipated -
while struggling smaller peer Dillard's Inc. (DDS) also had a
narrower-than-anticipated decline.
Wal-Mart Stores Inc. (WMT) stopped reporting monthly sales data
in May.
-By Kevin Kingsbury, Dow Jones Newswires; 212-416-2354;
kevin.kingsbury@dowjones.com