By Dow Jones Business News, October 10, 2013, 09:59:00 AM EDT
By Nathalie Tadena
Retailers posted muted sales gains in September as they stepped up promotions in an effort to entice consumers who
remain cautious about their spending, in part due to concerns about the broader economy and government shutdown.
Same-store sales--for the few companies that still report monthly results--came in below expectations as retailers
were hurt by continued weak mall traffic and increased promotions, especially among teen-focused companies.
Teen retailer Buckle Inc. ( BKE ) was one of the worst performers of the month, posting a 4.5% decline in same-store
sales, when an increase of 1.2% was expected. In the women's division, which represents more than half of Buckle's
sales, the company said sales fell slightly while price points were down 3.5%.
September proved to be a difficult month, said Ken Perkins of Retail Metrics, noting "back-to-school sales were
lackluster at best" and "the fashion cycle was uninspiring." He noted consumer confidence waned in part due to
government shutdown worries and that consumers continued to focus on bigger-ticket purchases such as cars, housing and
The nine retailers tracked by Thomson Reuters were expected to show 3.1% growth in September same-store sales, or
sales at stores open at least a year, versus the 5.5% increase posted a year earlier. So far, eight of the companies
have reported and posted a 2.2% increase. Gap Inc. ( GPS ) is slated to post results after market close Thursday.
Many retailers, including the major department stores, have stopped reporting monthly results over the past year,
making it more difficult to gauge the performance of the entire industry.
David Bassuk of consulting firm AlixPartners said consumers are willing to spend on select "must-have items," but
retailers must offer compelling values and new ideas to entice them to open their wallets.
"The consumer is very pensive," he said. "They're cautiously looking around, they're holding back on spending and
they're really uneasy about what is going on in Washington. When a consumer feels this way, the retail community needs
to be much more aggressive to get them to spend."
Teen consumers in particular have been much more cautious with their spending, prompting retailers to step up
promotions and discounts.
Teen retailer Zumiez Inc. ( ZUMZ ) reported a 0.6% decrease in same-store sales, in line with expectations. Footwear,
men's and boy's categories posted weaker same-store sales, while juniors, hard goods and accessories had positive
L Brands Inc. (LTD)--formerly Limited Brands---reported same-store sales rose 1%, below analysts' estimate of 2%
growth. The company said it undertook more markdowns than planned to boost traffic. The increased promotions, particular
in the younger consumer-focused Pink division, drove the company's merchandise margin rate down from a year earlier. Of
L Brands' units, Victoria's Secret, which houses the Pink division, posted a 1% increase in same-store sales, compared
with an expected 2.2% increase. Meanwhile, Bath & Body Works sales rose 2%, topping the expected 1.5% increase.
Discount retailer Fred's Inc. ( FRED ) said same-store sales rose 2.8% last month, topping analysts' expected 2.3%. The
company said pharmacy sales and script growth were key to its performance last month.
Costco Wholesale Corp. ( COST ) reported its U.S. same-store sales for the month increased 5%, excluding impacts from
gasoline price deflation and foreign exchange, just shy of the 5.1% growth analysts had expected. Among the warehouse-
club operator's strongest performing categories were food and sundries. The southeast and Texas were strong performers
by geography last month. Costco also reported fiscal fourth-quarter earnings and revenue that missed Wall Street
estimates, with some analysts pointing to a rise in overhead costs.
The back-to-school season is often seen as an indicator for a retailer's performance during the key holiday period.
The National Retail Federation expects sales in November and December to increase 3.9% from the prior year.
Write to Nathalie Tadena at email@example.com
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