Stores report solid sales in August
Thursday, August 31st 2006, 7:42 am
By: News On 6
NEW YORK (AP) _ Shoppers persevered at the nation's stores and malls in August, buying skinny jeans and other back-to-school fashions and giving many retailers solid sales gains for the month. The outlook for the rest of the year nonetheless remained unclear amid higher energy costs and interest rates and a deteriorating housing market.
As merchants reported their results Thursday, the early winners included Nordstrom Inc., Limited Brands Inc., as well as teen retailers Bebe Stores Inc. and Wet Seal Inc.
``The early signs are that back-to-school is doing better than expected,'' said Jharonne Martis, an analyst at Thomson Financial. ``Parents have budgeted for back-to-school. There is no stopping the consumer.''
According to Thomson Financial, of the 21 retailers that have reported same-store results so far, 11 beat estimates, while 10 missed. Same-store sales are sales at stores open at least a year and are considered a key measure of a retailer's health.
The solid performance in August _ a time when stores aim to do the bulk of their back-to-school business _ is comforting as many analysts expect a consumer spending slowdown in the second half; their concerns were heightened after June's sales stalled but business rebounded in July, helped by clearance sales of summer goods. After a slow start, business in August gained momentum even as concerns increased about the consumer's resilience.
Last week, the Commerce Department reported that sales of new homes dropped in July by the largest amount since February while the inventory of unsold homes climbed to a record high. And according to the latest snapshot of the job market, hiring slowed in July as employers added just 113,000 jobs. That pushed the unemployment rate to a five-month high of 4.8 percent and provided more evidence that companies are growing more cautious amid high energy prices, though they have retreated recently.
Such bad news about the economy, particularly the job market, weighed on consumers in August, causing their confidence to tumble even more than expected to its lowest level in nine months, according to the New York-based Conference Board.
Nordstrom said its same-store sales rose 7.1 percent; analysts polled by Thomson Financial expected a 3.3 percent gain.
Limited had a 9 percent gain in same-store sales, better than the 6.2 percent estimate from analysts.
Teen retailers generally had a good performance. Bebe had a 12.5 percent gain in same-store sales, better than the 11.4 percent analysts projected.
Wet Seal, which operates stores under both Wet Seal and Arden B., had a 8.7 percent gain in same-store sales in August, better than the 7.0 percent forecast.
``At the Wet Seal division, our back-to-school season sales performance is strong and we are seeing sales increases in eveyr significant product category,'' said Joel Waller, chief executive officer of Wet Seal, in a statement.
But teen retailer Pacific Sunwear of California Inc. struggled with a 9.4 percent drop in same-store sales, worse than the 4.6 percent decline Wall Street estimated.
On Wednesday, Costco Wholesale Corp. reported a 5 percent increase in same-store sales, missing the 5.7 percent estimate. The wholesale club operator issued the sales report as it warned that fourth-quarter profit would be below analysts' estimates, as sales on items like jewelry and furniture slowed and the company struggled with higher gas prices.
American Eagle Outfitters Inc. reported an 11 percent gain in same-store sales in August, better than the 9.1 percent estimate from analysts.
Hot Topic Inc. suffered a 6 percent drop in same-store sales, worse than the 5.7 percent analysts expected.