Can Anything Save These Retailers Now?

Giving retailers an A for effort in August would be way too kind. Back-to-school shopping should be a boon for retailers, but not this year. Despite some better-than-expected August same-store sales data, the sector and its cash registers remain eerily quiet.

Not adding up to much
Overall, same-store sales fell 2.9% in August, the 12th consecutive monthly decline. That figure did beat analysts' expectations for a 3.8% decline, but it's no cause for celebration.

Let's take a look at some specific retailers' sales data for August.

Company Name

CAPS Rating

August Comps

August Net Sales

Costco (Nasdaq: COST  )

****

(2%)

Flat

Gap (NYSE: GPS  )

*

(3%)

(2%)

Abercrombie & Fitch (NYSE: ANF  )

**

(29%)

(23%)

Target (NYSE: TGT  )

***

(2.9%)

0.1%

Aeropostale (NYSE: ARO  )

**

9%

16%

Buckle (NYSE: BKE  )

***

3.6%

9%

*All data from CAPS and company press releases.

Costco, Target, and Gap were all lauded in the media for topping analysts' forecasts, but their numbers are still nothing special.

In particular, Gap's turnaround is getting extremely long in the tooth, after years of malaise. A 7% increase in its stock intraday looks absurd to me, especially given that only one of its concepts could deliver positive same-store sales. (Old Navy increased comps by 4%, in case you were curious.) Despite that pleasant surprise, Gap hasn't given buyers any less reason to beware.

Abercrombie & Fitch delivered the kind of abysmal numbers that shareholders increasingly expect these days. I guess kids (and their wallet-wielding parents) don't feel like adding a $90 hoodie to their back-to-school ensembles. Worse yet, Abercrombie's still paying its CEO a huge chunk of change for this ongoing lack of performance. Thank goodness for reliable old Aeropostale and Buckle, which continue to buck the retail trends.

The back-to-school blahs
Clearly, back-to-school shopping didn't give August comps much of a boost. Many consumers simply can't spend money like they used to, in the face of layoffs, lost houses, and slashed credit card limits. Sears Holdings' (Nasdaq: SHLD  ) Kmart recently announced that some shoppers have been driven to put simple, inexpensive school supplies like pens, notebooks, and markers on layaway.

Retail is a difficult sector right now, and investors who aren't careful may see their portfolios get razed before it's all over. In this minefield of a market, companies like Aeropostale, with strong brands, sturdy balance sheets, and trend-bucking performance, are definitely the way to go.

Shop around for some related Foolishness:

Costco and Sears Holdings are Motley Fool Inside Value picks. Costco is also a Stock Advisor selection, and the Fool owns shares of it. Try any of our Foolish newsletter services free for 30 days.

Alyce Lomax does not own shares of any of the companies mentioned. The Fool has a disclosure policy.


Read/Post Comments (0) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 977763, ~/Articles/ArticleHandler.aspx, 10/24/2014 12:19:25 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement