Despite higher same-store sales, October continued to be difficult for UK apparel retailers

Despite higher same-store sales, October continued to be difficult for UK apparel retailers

Despite low expectations, US apparel retailers managed to overcome a number of hurdles in October - including the government shutdown and soft economic growth - to post same-store sales gains for the month.

But many chains continue to express caution heading into the all-important holiday season.

According to Retail Metrics, October sales were not as bad as feared, putting in a "better-than-expected" comp rise of 4.0%. 

But the research firm's president, Ken Perkins, noted that following a lacklustre back-to-school shopping season, October continued to be difficult for apparel retailers in particular.

"The entire segment has lacked any significant fashion catalyst to generate buzz, traffic, and ultimately sales for the group," he noted.

"The first half of the month was unseasonably warm, which proved to be a further unwanted impediment to selling 'buy-now, wear-now' fall/early winter merchandise that had hit stores."

He added that stronger spending on big-ticket purchases such as appliances meant that mall-based specialty apparel chains and department stores "have been forced to be more promotional throughout the month to combat this trend and offset weak traffic."

His comments are echoed by the International Council of Shopping Centers (ICSC), whose tally showed US chain-store sales posted a gain of 4.1% for the fiscal month of October on a year-on-year basis.

However, Michael Niemira, vice president of research and chief economist for ICSC, offered a more upbeat comment, suggesting: "Sales trends seemingly are back on track."

He also sees October's gains as "encouraging" for retailers heading into the important holiday shopping period. "It would appear that the consumer has come back, just at the right time."

For November, ICSC research anticipates that comparable-store sales will increase between 3.5% and 4.5%, with the addition of Thanksgiving Day creating extra shopping time for many retailers and an easy year-over-year comparison to November 2012 when sales slipped 0.1%.

In his view for the holiday season, Perkins believes "economic growth looks to be modest but tenuous," with many consumers continuing to be cautious in their spending and steep discounting likely to feature heavily from now until the New Year. 

Winners and losers
Feedback from retailers suggests many continue to expect a difficult sales environment through to the end of the year - although several have also raised their earnings expectations too.

"October sales benefitted from some cooler weather during the month relative to the prior year," according to John Cato, president and CEO of The Cato Corporation. The retailer has lifted its third quarter earnings forecast to the range of $0.13 to $0.15, which compares with $0.16 last year and is up from earlier guidance of $0.02 to $0.09.

Limited Brands also expects to report third quarter earnings per share at the high end of its guidance of $0.23 to $0.28.

And at Stein Mart, "our strong sales continued into October, driven by upgraded designer and national brands, great fashion-forward merchandise and value pricing," said CEO Jay Stein.

"We are working hard to maintain our momentum through the fourth quarter, despite the shortened holiday selling season and highly promotional environment we see around us." 

Gap Inc also offered an upbeat profit outlook for the third quarter, now seeing earnings per share in the range of $0.70 to $0.71, compared with $0.63 reported the year before. But third quarter merchandise margins are expected to be below last year it warned.

US retailers' October 2013 sales
Action sportswear and footwear retailer Zumiez Inc said its total net sales for the four weeks to 2 November increased 10.4% to $46.3m, up from $41.9m the year before. The company, which operates 548 stores, reported a 1.2% rise in comparable store sales during the month.

At denim specialist The Buckle, net sales increased 2.8% in October to $86.6m, from $84.2m in the prior year period. Comparable store net sales, for stores open at least one year, rose 2.6%.

Value-priced fashion retailer The Cato Corporation also saw sales gain over the month, rising 4% to $66.7m, from $64.3m a year earlier. The company, whose chains include Cato, Versona and It's Fashion, said same-store sales for October increased 3%.

For Limited Brands (now known as L Brands), operator of the Victoria's Secret, Pink and La Senza stores, net sales surged 11.4% to $680.5m, compared with $611.0m last time. Comparable store sales increase of 8% for the four-week October period.

Off-price fashion retailer Stein Mart, meanwhile, booked a rise of 6.9% in total sales during the month, rising to $95.0m from $88.8m. It added that comparable store sales were up 5.4%. It highlighted dresses, ladies' career sportswear, women's and intimate apparel for the strongest sales during the month, but said men's furnishings, ladies' boutique, ladies' casual sportswear and petites "were more challenged."

And speciality clothing retailer Gap Inc posted a 6% rise in October net sales to $1.29bn, up from $1.22bn a year earlier. Comparable sales were up 4%, thanks to gains at all three of its global brands, with gains of 5% at Gap, 1% at Banana Republic, and 2% at Old Navy.