December proved a more positive month for the handful of US apparel retailers still reporting their monthly comparable sales figures as strong job growth coupled with modest wage gains look to finally be driving better improved retail sales.
According to research firm Retail Metrics, final December same-store sales increased 10.3% for monthly reporters, versus a 7.2% forecast and 1.7% a year ago. This compares to a 9.5% increase in November and a 6.8% gain in October.
Retail Metrics president Ken Perkins said the foundation for strong December, holiday, and fourth-quarter same store sales growth has been set by the strongest economic growth since prior to the Great Recession, with low unemployment, solid retail sales, rising home and equity prices having pushed US consumer net worth into “record territory”.
Meanwhile, strong job growth coupled with modest wage gains look to finally be driving better improved retail sales.
The weather was generally favourable for retailers throughout December but Perkins warned it was a touch on the warm side ahead of the current deep freeze that hit the Midwest and Northeast as well as parts of the South this past week.
Promotional levels have largely been in check throughout the holiday season with much of speciality and teen apparel retailers 40-50% off the box comparable to last year, said Perkins, while retail managements did “a much better job” tightening the reigns on inventory positions that kept clearance markdowns in better check and should lead to improved calendar fourth-quarter earnings growth.
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While two of the apparel retailers still reporting monthly comparable store sales posted increases in December, one booked its 30th consecutive monthly decline.
This was Nebraska-based denim specialist The Buckle, which saw same-store sales fall a slightly worse than expected 4.1% relative to Retail Metrics’ consensus estimate of -3.3%. This was a 50 basis point sequential deterioration from the 3.6% drop posted in November. The Buckle’s last positive monthly same store sales increase occurred more than two years ago in June 2015 with a 0.5% gain. The company also booked a 4.8% decline in net sales to US$147.2m from $154.6m in the year-ago period.
Meanwhile, comparable store sales for value-priced fashion and accessories retailer Cato Corporation continued on their negative trend in December. The retailer turned in a worse than expected 9% comp decline that fell short Retail Metrics’ -5% consensus estimate. The Charlotte, North Carolina-based chain has now comped negatively for 22 straight months. Net sales were also down 9% to $94.7m.
CEO John Cato said: “The December same store sales decline is consistent with our recent trend. We expect the fourth quarter earnings to be a loss of between $0.30 and $0.45 versus a loss of $0.48 last year. This includes our current estimated impact of an additional expense of between $0.20 and $0.30 for the required adjustments due to the implementation of the Tax Cuts and Jobs Act of 2017. The company’s estimate for full year earnings per diluted share is in the range of $0.50 to $0.65 versus $1.72 last year.”
L Brands, owner of the Victoria’s Secret, Pink and La Senza brands, reported a 1% December same store sales gain that was right at the mid-point of its initial comp guidance for 0-2%. Expectations had ticked higher for L Brands in recent days due to positive data coming out of the holiday shopping season that pushed Retail Metrics’ consensus estimate up from 1% last week to 1.4% currently. The Columbus, Ohio-based chain said net sales were up 3% to $2.52bn from $2.44bn last year.
Speciality apparel and footwear retailer Zumiez, meanwhile, reported an impressive December 7.9% same store sales increase on top of a 3.4% increase in the year ago December period. This beat Street forecasts for a 4.1% gain, and represents the company’s tenth consecutive positive monthly same store sales increase. Total sales were up 11.4% to $160m.
