A Deeper Dive Into August Retail Sales

In results that came in stronger than many expected, same-store sales rose in August by more than 3 per cent. The results are especially surprising since people just a few days ago were saying the back-to-school shopping season was turning into a big bust. However, it does appear that big discounts were part of what drove sales numbers, which means that retailer profits may not be as robust as you’d otherwise expect with the sales gains.

Heavy discounts during the back-to-school season, which were deeper than retailers had offered in years, drove healthy levels of traffic and sales. Tax-free holidays that were held in several states in August also provided an additional boost.

Major chain stores reported a 3.3% sales gain compared with a year earlier, according to Thomson Reuters’ tally of 27 retailers. Analysts had expected a more modest 2.5% rise. Sales rose in all categories including discounters, department stores and apparel chains. Two-thirds of retailers either beat or met expectations.

That was a relief after two years of sluggish back-to-school sales, but retail analysts and economists say retailers need to be prepared for what’s expected to be a highly competitive fall and another tough holiday season.

Retail Metrics said sales rose 3.5 per cent while Kantar Retail recorded the gain as 3.4 per cent and ICSC estimated that sales rose 3.2 per cent.

ICSC’s tally shows that same-store sales rose 3.2 per cent in August.

ICSC’s numbers are based on 31 retailers. In its monthly report, ICSC wrote:

The August results continued to reflect a bifurcated and uneven performance with a group of very strong performers and a group of weak ones within the same subsector. Some of the strong sales performance by retailers in August included Abercrombie & Fitch (+6.0%); Costco Wholesale Corp. (+7.0%); Macy’s Inc. (+4.3%); Nordstrom, Inc. (+6.3%), Limited (+10.0%); Stein Mart (+8.5%); and Zumiez (+9.1%).

By segment, the August results were relatively steady with July. Apparel specialty comp‐store sales grew by 3.2% in August vs. +3.6% in July. Department store sales rose by 3.3% in August vs. 3.9% in the prior month. Discounter sales grew by 1.8% in August vs. 2.0% in July and wholesale club sales rose by 6.4% in August vs. 5.6% in July.

Among the retailers that choose to comment on back‐to‐school sales, they generally were encouraged by what they saw‐‐aside from the weather impact. Target’s chairman, for example, observed that his company was “pleased with [its] strong performance in back‐to‐school and back‐to‐college categories.” Ross’ vice chair commented that he was “pleased” with his company’s ability “to offer terrific bargains on a wide array of product for back‐to‐school shoppers drove healthy traffic to [its] stores during the month.”

Here are ICSC’s monthly same-store sales year-over-year changes, not seasonally adjusted, going back to 1993.

index august

Here is ICSC’s index of same-store sales, seasonally adjusted, going back to 1992.

index august

According to Kantar Retail, sales-weighted same-store sales excluding Walmart increased 3.4 per cent in March for the 30 retailers that reported numbers. (A pdf with each retailer’s results can be downloaded here.)

Frank Badillo, senior economist at Retail Forward, said in a statement, “August sales held up relatively well because shoppers’ intention to curb their spending plans was outweighed by their back-to-school needs, especially when they scrimped on meeting those needs a year ago.”

Retail Metrics, meanwhile, reported that same-store sales increased 3.5 per cent, beating its expectations by 70 basis points.

This post originally appeared at TrafficCourt and is republished with permission.

(Copyright ©2010 Penton Media, Inc. Reprinted with permission of Penton Media, Inc. All rights reserved.)

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