September was a more positive month for the retail industry

September was a more positive month for the retail industry

September proved a slightly more positive month for the handful of US apparel retailers still reporting their monthly comparable sales figures as retail foot traffic seems to have stabilised and cooler weather helps shift fall merchandise, but the looming spectre of Amazon continues to cast a pall over the group in the run up to the key holiday trading season, with all but one recording a decline.

According to research firm Retail Metrics, September same-store sales increased 5.4% for monthly reporters, versus a 5.3% forecast and 0.6% a year ago. This compares to a 5.9% increase in August, and a 4.8% gain in July.

Retail Metrics president Ken Perkins says weather turned cooler in the Midwest and Northeast, which was more favourable for fall seasonal merchandise sales, while retail inventories across both mall-based and off-mall chains look to be in "pretty good shape" with promotional levels holding relatively steady.

But while retail foot traffic looks to have stabilised over the past couple of months, Perkins says the crucial question is whether retailers can drive adequate traffic to their websites and doors through the rapidly approaching holiday shopping season, or will they continue to donate share to Amazon in November and December?

"We are sceptical on this question but numerous chains have made significant strides in cutting delivery times and ramping up click and pick services so it is not out of the realm of possibility," he says.

Meanwhile, both September and calendar third-quarter retail sales results are "likely to be skewed" following what Perkins calls the "devastating impact" Hurricane Harvey had on the nation's fourth-largest metropolitan area, Houston, Texas. "Coupled with Hurricane Irma's destruction in Florida, Georgia, and South Carolina there is likely to be a modest September drag on sales," he explains. "This creates the possibility for greater comp sales surprises."

Winners and losers

All but one of the apparel retailers still reporting monthly comparable store sales posted declines in September – with one booking its 27th consecutive monthly decline.

This was Nebraska-based denim specialist The Buckle, which posted a better than expected 5.7% decline in comps, relative to Retail Metrics' consensus estimate of -7.5%. This was a 220 basis point sequential improvement from the 7.9% drop posted in August. The Buckle's last positive monthly same store sales increase occurred over two years ago in June 2015 with a 0.5% gain. The company also booked a 6.1% decline in net sales to US$77.9m for the five weeks ended 30 September from $82.9m in the year-ago period.

Meanwhile, comparable store sales for value-priced fashion and accessories retailer Cato Corporation continued on their negative trend in September. The retailer reported its ninth double-digit same store sales decline in the last 11 months, with comps falling 11% year-on-year. Cato has now comped negatively for 19 straight months. Net sales were down 8% to $69.8m.

CEO John Cato said: "Negative sales trends continue to put severe pressure on merchandise margins and profitability as we continue to work through our merchandise missteps. It is taking longer to work through these issues than expected and we expect full year earnings to be significantly below last year."

L Brands, owner of the Victoria's Secret, Pink and La Senza brands, turned in a better than expected -2% comp that was in-line with its guidance issued at the beginning of September. Net sales were up 1% to $981.6m from $971.4m last year. The company noted the exit of both the swim and apparel businesses had a negative 3 percentage point impact on total company comparable sales during the month. Meanwhile, the September hurricanes had about a 1 point negative impact to total sales during the month.

Speciality apparel and footwear retailer Zumiez, meanwhile, turned in an "impressive" 9.3% September comp gain for the month, beating Retail Metrics' 2.9% consensus and marking its largest comp gain since a 9.4% rise in January. Zumiez was up against a difficult one-year comparison of +6.3%. Total net sales for the period were up 12.6% to $84.4m, compared to $75m last year. The company operates 695 stores across the US, Canada, Europe and Australia.