Value in vogue for back-to-school

A back-to-basics approach in Walmart’s apparel department has enabled the company to produce a modest degree of sales growth, but other value players are delivering high single digit comps.

Walmart reported its second consecutive quarter of positive same store sales in the apparel category during the second quarter when it produced a low single digit gain.

"Our customers continue to turn to Walmart for their basics, a key element of our apparel strategy that is built around jeans, underwear, socks and tees," Walmart U.S. president and CEO Bill Simon said during a pre-recorded conference call. "You see this executed in every store. In the second quarter, we had solid results in ladies and mens departments, as well as positive comps in shoes, which benefitted from the addition of new brands."

The improvement is noteworthy for Walmart’s apparel business, but it pales in comparison to leaders in the value arena such as Ross Stores and The TJX companies. Both companies reported better-than-expected 8% same store sales growth during August.

At TJX, the 8% comp increase came just two weeks after the company reported second quarter results and indicated third quarter comps would increased between 2% and 4%.

"Our strong momentum continued into August and gained as the month progressed, leading to comparable store sales increases that were well ahead of our expectations," said TJX CEO Carol Meyrowitz. "Once again, the strength of our performance was broad based. Customer traffic drove the comp sales increase across our divisions in the U.S., Canada and Europe, which we believe is a great indicator that our value proposition continues to resonate with consumers."

The strong performance prompted the company to narrow the range of its third quarter earnings forecast. Meyrowitz said the company expects earnings to be toward the upper end of a previously estimated range of 56 cents to 59 cents.

"We believe we are in an excellent position to buy into the terrific opportunities in the marketplace, bringing great brands and fashions at compelling values to our customers," Meyrowitz said.

At Ross, vice chairman and CEO Michael Balmuth said, "We are pleased with August same store sales that were ahead of our expectations. Our ability to deliver a wide array of name brand bargains for back-to-school shoppers drove healthy traffic to our stores during the month."

TJX ended the month with nearly 3,000 stores, consisting of 1,010 T.J. Maxx, 900 Marshalls and 399 HomeGoods stores in the United States; 222 Winners, 87 HomeSense and 13 Marshalls stores in Canada; and 339 T.K. Maxx and 24 HomeSense stores in Europe.

Ross ended the month with 1,072 Ross Dress for Less stores and 102 dd’s Discounts stores.


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