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A solid month for those keeping score, but the headlines don’t always tell the whole story.  The trend for September was clearly positive, with 17 companies reporting results that exceeded expectations, 5 that missed, and 2 that were inline.  Beneath the surface, there were a handful of underlying trends that are worth highlighting.

  • Almost every retailer with back-to-school exposure cited strength.  Shopping “closer to need” was the common catch-phrase used to describe why September ultimately ended up being the beneficiary of the annual return to class.  At some point, maybe the Street and the companies themselves will realize that “close to need” is analogous to shopping when it “makes sense”.  Your kid goes back to school in shorts because it’s still warm out.  The weather gets cooler. Mom goes to the store to replenish the fall wardrobe.  None of this is rocket science, but for some reason we keep talking about how the consumer is buying closer to need.  Now’s the chance to pre-empt holiday speculation by recognizing that the final 10 days before Christmas are the most important days.  Not Black Friday and not early December.
  • Promotional activity remained heightened during the month, especially in the teen apparel space.  JC Penney also cited promotional activity as the reason why it re-affirmed guidance (not raised) despite posting a better than expected topline. 
  • Gap noted that it expects October to be promotional for its brands given its “challenging” results in September.  They’re clearing out goods and moving on. 
  • The men’s business stood out for the month across a variety of retailers including JCP, JWN and ANF.  Perhaps this is a bit of pent-up demand as the male consumer looks to replenish his wardrobe after taking an extended break from the mall.  This is something to watch, especially since the focus for several months has been primarily on dresses, footwear, and the home.
  • Without question, momentum slowed in the final week of the month.  Almost every retailer highlighted week 5 as the weakest due to unfavorable weather (hot and rainy) as well as difficult comparisons with last year’s perfect cold weather set up.  Recall that an early cold spell came at the perfect time last year, allowing retailers to maximize full priced sell-throughs on early fall merchandise sets.
  • Coincident with weather patterns, the northeast region was most commonly called out as having the weakest regional results.
  • The south and southeast were among the better performing regions for the month.
  • Footwear remains a consistent standout, producing above trend results at: DDS, KSS, JCP, SKS, and JWN
  • American Eagle seems to have taken its foot off of the promotional gas, citing less promotional activity as the reason for raising guidance.  Recall that AEO has lowered guidance a handful of times since the Spring.  They appear to have lowered the bar too far.
  • Our overall index of same store sales remains relatively stable, despite what appears to have been a very good month for retailers.  On a one-year basis, the index remains in a narrow range, hovering between a 3.5% to 4% increase since May.  On a two year basis, the trend improved for the second month a row.  This is the first time we’ve recorded two months of sequential positive trends since the Feb/March time frame.

September Sales Tales - Sept SSS


Eric Levine