"August consumer confidence ticked up a 2016 high"

"August consumer confidence ticked up a 2016 high"

More favourable hot and dry weather and an uptick in consumer confidence resulted in a bounce-back in US same-store sales for August. For the few apparel retailers who still report their monthly sales, however, an increase in technology and travel spend weighed on monthly results. 

According to first figures from research firm Retail Metrics, comparable store sales for the US retail sector as a whole were up a modest 0.8%, marking an improvement from July's 1.7% year-on-year decline. 

Ken Perkins, president at the research firm Retail Metrics, says the macro-economic backdrop for retailers remains a plus, with unemployment below 5%.

"August consumer confidence ticked up a 2016 high, July personal income advanced a solid 0.4%, the housing market is in good shape, and the Atlanta Fed's GDPNow model is currently forecasting 3.5% real GDP growth for the third quarter. Macro data suggests that consumer spending should be robust and benefiting retailers in general."

Winners and losers

However, all but one of the apparel retailers still reporting monthly comparable store sales posted declines in August, with one company reporting a double-digit fall. 

Denim specialist The Buckle fared the worst with a comparable store sales decline of 14.8%, marking its sixth straight double-digit decline and its 14th consecutive monthly same-store sales drop. The retailer, which operates 470 retail stores, saw net sales decline 14% to US$87.2m for the four weeks ended 27 August, from $101.4m in the year-ago period.

San Francisco-based Gap Inc, which operates around 3,300 company-operated stores and 450 franchise stores, turned in its 15th negative monthly comparable sales result and a fall in net revenues for August. Comparable sales slid 3% versus a 2% decrease last year – steeper than analyst predictions of a 2% decline. 

Same-store declines for July were recorded at Gap's Banana Republic and namesake brands, of 10% and 5% respectively. Discount division Old Navy was the best performer and managed to generate a positive 1% comp gain, making it the only unit to beat expectations.

Gap CFO Sabrina Simmons says the company remains focused on improving results across its global brands, while Stifel analyst Richard Jaffe believes the firm's aggressive cost-cutting and business rationalisation plan "does nothing to improve the appeal or long term success of the Gap or Banana Republic brands".

Meanwhile, comparable store sales for value-priced fashion and accessories retailer Cato Corporation continued on their negative trend in August and remained well below company expectations, falling 8%. Net sales for the month dropped 7% to $62m. The retailer operates 1,373 stores under the Cato, Versona and It's Fashion formats.

L Brands, owner of the Victoria's Secret, Pink and La Senza brands, saw the month's strongest performance, turning in a 2% comparable store sales rise for August. Net sales increased 3% to $852.9m for the four weeks ended 29 August. The company operates 3,053 company-owned speciality stores in the US, Canada, the UK and Greater China.