Heavy discounting cuts into holiday profits
New York — Retailers across the board, from Victoria’s Secret parent L Brands Inc. and American Eagle Outfitters to Family Dollar Stores and Bed, Bath & Beyond, cut their fourth-quarter earnings forecasts on Thursday as heavy promotions and discounts cut into profits. Results were also impacted by multiple snowstorms, a shortened shopping season and cautious consumers.
In an Associated Press report, Ken Perkins, president of RetailMetrics LLC, said fourth-quarter earnings growth for the 120 stores he tracks are expected to be up 1.2%, the weakest performance since the 6.7% drop in the second quarter of 2009 as the country was just coming out of the recession
The heavy discounts did cause shoppers to open their wallets, resulting in a stronger-than-expected 2.7% increase in December same-store sales at the eight retailers tracked by the Thomson Reuters Same-Store Sales Index. (Very few retailers still report same-store sales on a monthly basis.)
L Brands said its December same-store sales rose 2%, missing Wall Street expectations for a 3.7% gain. The chain cut its holiday-quarter profit forecast.
Cato Corp also slashed its profit forecast after reporting a 4% decrease in same-store December sales.
“December same-store sales results were negatively impacted by bad weather in a number of our markets early in the month. Excluding the impact of this weather event, the sales environment remained difficult but same-store sales were in line with our year-to-date trend," said John Cato, chairman, president, and CEO of Cato.
American Eagle Outfitters Inc. said that same-store sales fell 9% in the nine weeks that ended on Jan. 4, 2014, compared to the year-ago period.
Pier 1 Imports Inc. downgraded its earnings forecast for the fiscal fourth quarter and the full year, citing a disappointing December.
Costco tops estimates in December
Issaquah, Wash. – Costco Wholesale Club’s same-store sales rose 3% in December, beating analysts’ estimates of a 1.8% gain. The metric climbed 5% in the U.S. and inched up 1% overseas for the five weeks ended Jan. 5.
Total monthly revenue increased 6% to $11.53 billion.
For the 18-week period, same-store sales were up 3%. In the U.S. the metric rose 4% and 1% internationally.
Cato deploys Celerant Technology for e-commerce site
Staten Island, N.Y. — Women’s apparel retailer Cato has made its debut into the world of online shopping with the launch of its first ever e-commerce site. With the help of its implementation partner Celerant Technology, the new website will support the growth of the brand and will offer the same collections as its brick-and-mortar stores, as well as additional sizes, colors and exclusive items.
“We are thrilled to enter the world of ecommerce,” says John Cato, Cato’s chairman, president and CEO “This significant milestone fully rounds out our services and offerings, along with our 1,100 Cato stores. Now our customers have the opportunity to access our fashions and accessories at any time from the comfort of their own devices.”