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DOW JONES NEWSWIRES
Retailers posted higher-than-expected September same-store
sales, even as analysts raised their estimates as the month came to
a close, with the outperformance potentially enough to end a
year-long streak of falling sales.
Victoria's Secret parent Limited Inc. (LTD) was among the upside
surprises, reporting its first same-store-sales increase since
August 2007. Target Corp. (TGT) reported a 1.7% drop, meeting
estimates, but the company was among the companies on Thursday
projecting fiscal third-quarter earnings at or above expectations.
Others included Kohl's Corp. (KSS) and J.C. Penney Co. (JCP).
The results and resulting optimism sent shares of many retailers
higher in premarket trading. Retailers have been suffering for more
than a year as consumers have continued to be less free with their
spending. But starting in September, comparisons with year-earlier
results became notably easier, increasing the near-term likelihood
of year-over-year growth gains.
If September ends up in the red, it would be the first time this
decade that the same month had two straight years of same-store
sales decline. An overall fall of about 1% was expected by
analysts, the smallest decline this year, though Labor Day falling
later on the calendar in 2009 helped last month's results.
Wall Street Strategies retail analyst Brian Sozzi said the
calendar shift, combined with "conducive weather for fall apparel
and accessories purchases, and dare I say modest interest in
discretionary buying in the West, will be the major themes when all
is said and done."
But while growth wouldn't signal the troubles are over, there
are reasons to be optimistic. Walgreen Co. (WAG) last week reported
higher nonpharmacy sales, with results handily topping analysts'
estimates, as expectations for September industrywide improved as
the month finished up. Family Dollar Inc. (FDO) on Wednesday
forecast 5% same-store-sales growth for the month.
Discounters had been among the best performers, but both drug
stores and apparel outlets were expected to outperform in
September. That is partially due to the effects of slumping
gasoline prices and currency changes on BJ's Wholesale Club Inc.
(BJ) and larger rival Costco Wholesale Corp. (COST). BJ's on
Thursday posted a 5.5% gain excluding gasoline sales, another month
of outpacing peers but below analysts' expectations. Costco on
Wednesday reported a 3% rise on that basis in the U.S., double
analysts' expectations.
Department stores also showed improved performance, with Macy's
Inc. (M) posting an 2.3% drop - half of what analysts anticipated -
while struggling smaller peer Dillard's Inc. (DDS) also had a
narrower-than-anticipated decline. J.C. Penney's 1.4% drop also was
less than expected, while Kohl's reported a 5.5% increase, not the
flat results analysts forecast.
Off-price apparel sellers TJX Cos. (TJX) and Ross Stores Inc.
(ROST) have been posting some of the best results of late, and they
had growth of 7% and 8%, respectively, again topping expectations.
Both also boosted their quarterly profit views. Their projected
results were slated to help the apparel group post flat same-store
sales, according to analysts surveyed by Thomson Reuters. That
forecast was much better than the figures the segment has reported
for most of the past several years.
Gap Inc. (GPS) posted an in-line 1% drop. Its long-struggling
Old Navy chain reported surprise growth in August and posted a
stronger-than-expected 13% jump for September - the biggest gain in
5 1/2 years. The company added merchandise margins for the month
were "significantly" above year-earlier levels. Teen-apparel
chains, especially Abercrombie & Fitch Co. (ANF), were expected
to be the weakest performers by sector, though many topped
analysts' expectations. That includes ailing Abercrombie, which
posted an 18% same-store-sales slump for September. The company has
recorded big declines for months as price-conscious shoppers
instead go to cheaper rivals like Aeropostale Inc. (ARO). It had a
19% surge, prompting the company to increase its fiscal
third-quarter profit target. American Eagle Outfitters Inc. (AEO)
also projected earnings at or above its prior forecast. Wal-Mart
Stores Inc. (WMT). It stopped reporting monthly sales data in
May.
-By Kevin Kingsbury, Dow Jones Newswires; 212-416-2354;
kevin.kingsbury@dowjones.com