All of the apparel chains which report monthly comparable store sales posted gains in December

All of the apparel chains which report monthly comparable store sales posted gains in December

Deep discounts, lower fuel prices and an improved employment market all helped to drive better-than-expected comparable store sales gains for US apparel retailers in the crucial month of December.

According to research firm Retail Metrics, comparable store sales for the US retail sector as a whole grew by 5% - beating its original forecast of 3.8%. This included Gap's 2% comparable store sales gain, which came in after the market closed yesterday (8 January).

A preliminary tally from the International Council of Shopping Centers (ICSC) was less optimistic with a 4.3% year-on-year rise. 

"Apparel, and especially the teen space, has a long way to go but in a fashionless holiday 2014 they avoided a worst case scenario despite a very promotional environment," noted Retail Metrics president Ken Perkins.

Having said this, Perkins pointed to the shift in the retail spending landscape as consumers move their money to gadgets, big ticket items, experiences, data plans, health care, and cable packages. This, he explained, is pulling spend away from apparel in particular.

"Secondly, spending is increasingly moving online and to mobile and retailers must position themselves to operate seamlessly in this environment," he added.

Winners and losers
Zumiez was among the month's standout performers, which booked an 8% rise in comparable store sales, with growth in all areas of the business.

Thanks to this and to a lesser extent better product margins, the retailer has also lifted its fourth-quarter earnings per share guidance to US$0.75-0.77 from $0.69-0.72. Sales are expected to be in the range of $255m to $256m, up on its earlier forecast of $249-$251m.

The Cato Corp, which saw comparable store sales rise 8%, also raised its fourth-quarter earnings per share forecast, and now expects it to range from $0.25-0.29. This compares to its previous guidance of $0.13-0.17, and is primarily due to higher sales and lower taxes. For the full year, Cato expects earnings per diluted share to be between $2.07 and $2.11, up on its most recent guidance of $1.95-1.99.

"December same-store sales results were positively impacted by the weather and were above expectations," said chairman, president and CEO John Cato.

And although L Brands (formerly Limited Brands) did not adjust its outlook, the retailer booked a solid 4% comparable store sales increase on top of relatively difficult comparisons, and margins improved year-on-year.

Meanwhile, Gap beat Retail Metrics' consensus expectations of a 0.1% rise with a 1% comparable store sales increase. An 8% gain at Old Navy managed to offset a 5% decline at Gap and flat results at Banana Republic.

Gap chairman and CEO Glenn Murphy noted: "During November and December, we were pleased to achieve a positive 3 comp, led by Old Navy with a very strong 12 comp for the combined holiday months."

December sales overview
Action sportswear and footwear retailer Zumiez saw comparable store sales increase 8% for the five weeks to 4 January 2015. The company, which operates 604 stores, said net sales grew 14.4% to $143.4m from $125.3m in the same period of the prior year.

Denim specialist The Buckle saw November comparable store sales, for stores open at least one year but excluding online, climb 2.5%. Net sales were up 5.4% to $190.6m from $180.9m for the group, which operates 450 stores.

Value-priced fashion retailer Cato booked a better-than-expected 6% increase in comparable store sales. The owner of the Cato, Versona and It's Fashion brands said net sales reached $109.2m, up 9% on $100.1m a year ago.

Over at L Brands, net sales grew 5% to $2.21bn for the five week period, compared to $2.10bn last year. The group, which owns the Victoria's Secret, Pink and La Senza brands, said comparable store sales increased 4%.

Off-price fashion retailer Stein Mart recorded a 5.8% rise in comparable store sales during the five weeks to 3 January. Net sales grew 7.9% to $189.5m from $175.6m for the company which owns 270 stores.

And clothing giant Gap saw December comparable store sales edge up 1%, boosted by a strong performance at Old Navy. The San Francisco-based retailer, which operates more than 3,200 stores, said net sales climbed 2% to $2.10bn from $2.05bn last year.