October proved a more positive month for the handful of US apparel retailers still reporting their monthly comparable sales figures, but sluggish mall traffic and unfavourably warm weather continued to cast a pall over the group in the run up to the key holiday trading season, as just two recorded an increase.
According to research firm Retail Metrics, October same-store sales increased 6.8% for monthly reporters, versus a 5% forecast and 1.4% a year ago. This compares to a 5.4% increase in September, and a 5.9% gain in August.
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Retail Metrics president Ken Perkins said that amidst all of the changes in retail, US macroeconomic data continues to run favourably for the retail sector.
Meanwhile, consumer confidence is elevated with signs of lower income consumers finally seeing the benefits of economic growth. “The elements for consumer spending growth are in place and yet retailers are fighting for their lives as the industry transforms and consolidates,” Perkins adds.
While mall traffic looked “particularly soft” with consumers eating out at mall-based restaurants but very sluggish traffic in stores, off-mall looked better but unfavourably warm weather for apparel and fall seasonal sales did not help struggling department stores and speciality apparel chains.
Winners and losers
While just two of the apparel retailers still reporting monthly comparable store sales posted increases in October, one booked its 28th consecutive monthly decline.
This was Nebraska-based denim specialist The Buckle, which saw same-store sales fall a better than expected 3.7% relative to Retail Metrics’ consensus estimate of -4.8%. This was a 200 basis point sequential improvement from the 5.7% drop posted in September. The Buckle’s last positive monthly same-store sales increase occurred over two years ago in June 2015 with a 0.5% gain. October’s 3.7% decline was the company’s best monthly comp since a 3.5% drop back in April. The company also booked a 4.3% decline in net sales to US$66.1m from $69.1m in the year-ago period.
Meanwhile, comparable store sales for value-priced fashion and accessories retailer Cato Corporation continued on their negative trend in October. The retailer turned in a 7% comp store decline, however, this was the company’s best monthly comp since an Easter-aided April comp decline of 2%. Cato has now comped negatively for 20 straight months. Net sales were down 10% to $62.3m.
CEO John Cato said: “Consistent with our previous releases, severe pressure on merchandise margins and profitability persists as we continue to work through our merchandise missteps. Although October same-store sales are better than the current year trend, our two-year same-store sales comparisons remain below expectations. Consequently, we expect our full-year earnings to be significantly below last year.”
In an encouraging development ahead of the upcoming holiday season, L Brands, owner of the Victoria’s Secret, Pink and La Senza brands, reported its first positive comp since last November with a better than expected 2% gain that exceeded Retail Metrics’ expectations for a 1.7% decline. L Brands has comped negative in each of the last ten months following the exit of its swim and apparel businesses, coupled with steady foot traffic declines at the nation’s malls. Net sales were also up, rising 5% to $794.1m from $756.7m last year. The company noted that for October, the exit of the swim and apparel categories had a negative impact of about 1 percentage point and 2 percentage points to total company and Victoria’s Secret comparable sales, respectively.
Speciality apparel and footwear retailer Zumiez, which has comped positively in 12 of the past 13 months, turned in a 6.6% comp gain for October. The company was up against a difficult one-year comparison of +10.2%. Total net sales for the period were up 10% to $61.5m, compared to $55.9m last year. The company operates 694 stores across the US, Canada, Europe and Australia.
