Retailers posted a 6.1% jump in SSS for August, a month that could end up as the biggest “beat” since we began tracking same-store sales more than a decade ago.
Retail sales fared even better in August than they did in July, as the Same Store Sales Index climbed 6.1% from year-earlier levels. That is far better than the preliminary estimate of 4.1%. Only two retailers – teen apparel companies Wet Seal (WTSLA.O) and Zumiez (ZUMZ.O) – reporting their August SSS results, announce results that didn’t beat analysts’ expectations. That’s a record high “beat rate”; the largest number of retailers in the index to beat analysts’ forecasts since we began tracking monthly SSS results more than a decade ago.
After factoring in the results from the drug stores (Walgreens (WAG.N) and Rite Aid (RAD.N) will report their August same-store sales next week), the rate of growth in SSS is expected to fall to 3.6%. Although that will still be close to double the final estimate of only 2% growth over year-ago levels, it is a weaker performance than the 4.8% advance recorded in August 2011.
Excluding the drug store sector, retailers this year have announced an average gain in same-store sales of 4.7% monthly, although that still falls below the average advance of 5.4% monthly recorded in 2011. Stores like Nordstrom (JWN.N) and the Gap (GPS.N) contributed to that; both smashed analysts’ expectations, with Gap’s Old Navy division benefitting from back-to-school sales.
Only two retailers of the 19 total in the SSS Index have so far failed to beat analysts’ expectations of their same-store sales for August. (We still are waiting for the results from the two drug stores in that index.) Mall traffic increased later in the month, and a sales tax holiday encouraged those late shoppers to open their wallets and spend on back-to-school items at a more rapid clip than analysts had expected. As expected, the apparel group posted the best performance, closely followed by the department stores. Those groups had been expected to do well, but the Discount sector also performed much more strongly than analysts had expected, posting a 5% increase in same-store sales, better than the final estimate of 3.7%.
Still, not all retailers are upbeat about what lies ahead for the rest of the year. Ross Stores (ROST.O) expects to report growth in SSS that is in the low single digits, down from its recent typical SSS gains in the high single-digit forrange for September and October. Vera Bradley (VRA.O) attributed the fact that it lowered its full-year earnings guidance to the uncertain outlook for consumer spending. The teen apparel sector, along with the drug stores, remains a drag on the overall SSS index.
• For the full report, please click here.
• For more on analysts’ changing views of retail Sales, please watch this interview with analyst Jharonne Martis.
