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Limited Brands, The Buckle shine in December; Gap, Aeropostale disappoint

BY Marianne Wilson

New York City — Many retailers reported solid sales gains for December, but the deep discounts and promotions that shoppers have come to expect cut into profits. A range of retailers, including Target and The Children’s Place, reduced their, reducing their earnings outlooks. Overall, retail sales rose 3.4% at the 22 retailers tracked by the Thomson Reuters same-store sales index, compared with the 3.3% analyst forecast.

Some retailers offered steep discounts during the crucial holiday season. Alison Paul, retail sector leader at Deloitte in Chicago, said the chains that spread their discounts out over the season did well, while those that used up their promotions during the weekend after Thanksgiving suffered.

“The retailers who are still standing are the ones who did their homework several months ago and made decisions about promoting in waves,” Paul told Bloomberg. “Getting promotions right is an art form.”

In the specialty apparel sector, Aeropostale Inc. was one of the biggest losers, posting a 10% drop in same-store sales. Total revenue fell 5% to $682.6 million for the nine weeks ended Dec. 31.

CEO Thomas Johnson said the holiday period "reflected aggressive levels of promotions throughout the mall."

Gap Inc. reported that its overall same-store sales were down 4%. All categories, which encompasses the international unit as well as North America’s Gap, Old Navy and Banana Republic stores, suffered declines. Banana Republic posted a 2% decline, while sales fell 4% at Old Navy’s North America stores, 4% at Gap’s North America stores, and 6% at all international stores.

“We expected December to be highly promotional, and while we competed aggressively across our brands, our performance was below our expectations,” said Gap chief executive Glenn Murphy.

Destination Maternity Corp. said its same-store sales fell 4.1% in December amid continued promotions and markdowns. The chain lowered its earnings outlook.

The Children’s Place Retail Stores Inc. also lowered its earnings guidance for its fiscal fourth quarter, saying that higher costs and unseasonably warm weather hurt its performance as it sharply marked down prices to move winter clothing. The chain said that its guidance assumes that same-store sales will be about flat for the quarter.

Limited Brands, the parent of Victoria’s Secret and Bath and Body Works, said that its same-store sales jumped 7% in December. The results beat expectations and the company raised its fourth-quarter guidance. Analysts had expected a 5.7% rise.

The Buckle Inc. also did better than Wall Street expected. Its 8.9% increase easily topped predictions for a rose of 5%. The chain cited strong holiday sales of trendy jeans, outerwear and footwear.

In other specialty apparel same-store sales results for December:

  • Zumiez Inc. saw its sales rise 10%, beating estimates of a 5.1% increase. The company also raised its fourth quarter outlook.
  • Hot Topic’s sales rose 1.2%, with sales at namesake stores up 2.2% and sales at Torrid down 3.7%.
  • Cato’s sales fell 1%, in line with its expectations.
  • The Wet Seal Inc.’s sales dropped 3.7%, worse than expected, besting Wall Street’s forecast. Revenue fell 10.2% at Arden B and slipped 2.5% at Wet Seal.
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P.Lopez says:
Apr-02-2013 08:54 pm

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Destination Maternity Corp. said its same-store sales fell 4.1% in December amid continued promotions and markdowns. The chain lowered its earnings outlook. Chatrandom

P.Lopez says:
Apr-02-2013 08:54 pm

Destination Maternity Corp. said its same-store sales fell 4.1% in December amid continued promotions and markdowns. The chain lowered its earnings outlook. Chatrandom

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Safeway prepares to exit Philadelphia market

BY CSA STAFF

PLEASANTON, Calif. — Safeway on Thursday announced the sale of 16 of its Genuardi’s stores in the greater Philadelphia area to Giant Food Stores, a division of Ahold USA. Safeway will continue to operate these stores until the transaction closes, and the company is working through an orderly transition for all of these stores.

In addition, Safeway plans to close three Genuardi’s stores and sell the remaining eight Genuardi’s stores, which it will continue to operate while it is working with potential buyers.

"We have made the decision to exit the greater Philadelphia market, including four stores in New Jersey, and focus our resources in those operating areas where we have a stronger presence," stated Steve Neibergall, president of Safeway’s eastern division. "We will be working with the purchasers to ease the transition for our store employees and making efforts to facilitate continued employment for as many of them as possible."

As for Giant, the company plans to convert the stores under the Giant Food banner.

"Giant is always looking for convenient locations to better serve our customers," Giant Food president Rick Herring said. "We are very excited to have the opportunity to expand our presence in greater Philadelphia and serve new customers."

The sale currently is expected to close within the first half of 2012, subject to customary closing conditions, including expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

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FINANCE

Discounters and department stores turn in mixed results for December

BY Marianne Wilson

New York City — The nation’s discounters and department store retailers turned in mixed results for December, with many chains citing unseasonably warm weather that sapped demand for cold-weather merchandise.

“Cold-weather categories, which are highly profitable and represent approximately 25% of our business in December, were down mid-teens on a percentage basis,” said Tony Buccina, vice chairman, president – merchandising, The Bon-Ton Stores, whose December same-store sales fell 0.7%. The company widened its loss forecast.

In the department store and discount store sector, Costco Wholesale Club, Target Corp., and Kohl’s Corp. were among the chains that missed expectations, while Macy’s Inc. Nordstrom and TJX Cos. all did better than was expected.

At Macy’s, same-store sales rose 6.2%. The company is raising its earnings outlook for the fourth quarter and full year due to a strong holiday season and will double its quarterly dividend to 20 cents a share. Macy’s is also increasing its share repurchase program by $1 billion.

Nordstrom said its same-store sales jumped 8.7% for the five weeks ended Dec. 31, easily topping Wall Street predictions for a 5.1% increase.

The company said the strongest regions were the South and Midwest, and that sales were particularly strong during the first week of the period, and the last two weeks of the period.

Meanwhile, The TJX Cos. announced a two-for-one stock split on the heels of a better-than-expected 8% increase in same-store sales for December. The chain noted that it made a strategic decision to clear cold weather apparel in the unseasonably warm winter.

“We enter January with very lean inventories and the flexibility to ship fresh merchandise with great values to our stores. As we look further out into next year, we believe we are very well positioned to continue to post strong sales and margins,” said Carol Meyrowitz, CEO, The TJX Cos.

Kohl’s said its December same-store sales fell 0.1%, missing the estimate for an increase of 2.2%. The chain said it would miss Wall Street’s fourth-quarter profit projection because of weak holiday sales.

J.C. Penney Co. reported that its December same-store sales grew 0.3%, while total sales for the month fell 2.3%. Analysts had expected the chain’s same-store sales to fall 0.1% in December. J.C. Penney said it would report a fourth-quarter loss of 30 cents to 45 cents a share. The company said the loss would include 50 cents to 55 cents a share in restructuring and management transition charges.

For the month, children’s apparel and women’s accessories were the top performing merchandise divisions. While overall sales and traffic were softer than anticipated, J.C. Penney said better trends in its stores during the week leading up to Christmas and increases in traffic and orders on jcp.com during the key holiday shopping periods of the week after Thanksgiving and the week before Christmas.

Costco’s same-store sales rose 7% in December, below analysts’ projections for a 7.6% increase. The same-store sales reflected increases of 7% in the United States and 9% internationally.

In other December same-store sales results:

  • Ross Stores reported a 9% increase, easily beating the 4.2% expected by analysts and coming on top of growth in the previous two years. The retailer raised its fourth-quarter earnings guidance.
  • Saks Inc.’s sales were up 5.8%, matching analyst expectations. Top categories at Saks included clothing, handbags, women’s shoes, jewelry, men’s accessories and perfume.
  • Duckwall-Alco Stores’ sales slipped 0.3%.
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