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US apparel retailers' December 2016 sales roundup

December proved to be a dismal month for the handful of US apparel retailers still reporting comparable sales figures, with soft in-store traffic over the holiday season meaning that only two recorded a rise. This was despite retailers coming off a modestly strong Black Friday weekend.

According to first figures from research firm Retail Metrics, December same-store sales were up 1.7% relative to the 1.5% consensus same-store sales gain expected, and compares to a 0.8% increase in November.

Ken Perkins, Retail Metrics president, says December experienced favourable weather conditions compared to last year, easy comparisons, strong consumer confidence and a solid economic backdrop.

Despite this, all of the monthly apparel reporters, with the exception of Gap Inc, missed expectations. Outside of the e-commerce space, Perkins notes things are "tough out there" for retailers, even though consumers look to have spent at a "robust clip" this holiday season.

Compared to two or three years ago, holiday 2016 in-store traffic was very soft, while e-commerce, and particularly mobile sales, were strong throughout the month.

Winners and losers

While just two of the apparel retailers still reporting monthly comparable store sales posted increases in December, two companies also reported double-digit declines.

Denim specialist The Buckle fared the worst, posting a 15.5% drop in comparable store sales for the month. The Buckle has comped negative in each of the last 17 months and in 20 of the last 22 months. The Nebraska-based chain has turned in double-digit same-store sales declines in ten of the first 11 months this year. The retailer, which operates 470 retail stores, saw net sales decline 15.1% to US$154.6m for the four weeks ended 31 December, down from $182.1m in the year-ago period.

San Francisco-based Gap Inc put in the strongest performance with a 4% increase in comparable sales, versus a 5% decline last year. This is only the retailer's second positive monthly comp in the last 21 months, but was well ahead of analyst expectations of a 1.7% decline and represented the largest monthly same store sales increase for Gap in over two years dating back to November 2014.

Sales were primarily boosted by positive comparables from the Old Navy division, which was up 12% versus a negative 7% last year. The Gap brand was also in positive territory with comparable sales edging up 1% on a decline of 2% last year. Banana Republic was the only division to record a decline, of 7% from 9% in 2015.

"We're pleased with the improved momentum we saw over the holiday season, driven primarily by a positive customer response at Gap and Old Navy," says Sabrina Simmons, chief financial officer, Gap Inc. "Based on these results, we now expect full-year adjusted earnings per share to be modestly above the high end of our previous adjusted guidance range of $1.92."

Meanwhile, comparable store sales for value-priced fashion and accessories retailer Cato Corporation continued on their negative trend in December, falling 12%. Cato has now posted negative monthly comps in each of the last ten months. Net sales for the month also dropped 12% to $104.4m, from sales of $18.5m for the same period last year. During the month of December, the company closed six stores.

CEO John Cato said: "December same-store sales results were unfortunately consistent with our recent trend. We now expect fourth-quarter earnings per diluted share will be a loss of $0.50 to a loss of $0.54, versus our previous guidance of a loss of $0.07 to a loss of $0.11 versus $0.42 last year."

L Brands, owner of the Victoria's Secret, Pink and La Senza brands, turned in a 1% comparable store sales rise for December, that missed expectations for a 1.5% gain and fell short of the retailer's guide of 0-2% comps. Net sales increased 1% to $2.44bn for the five weeks ended 31 December. The company operates 3,087 company-owned specialty stores in the US, Canada, the UK and Greater China.

Speciality apparel and footwear retailer Zumiez, meanwhile, recorded a 3.4% increase in comparable store sales, compared with an 8.9% decrease in the period last year, but missed Retail Metrics' consensus estimate by 100 basis points. It was the teen chain's fourth straight positive comp following a string of 18 consecutive negative same-store sales declines. Total sales were up 6.8% to $143.6m, compared to $134.5m in the year-ago period. The company operates 690 stores across the US, Canada, Europe and Australia.

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