Let’s see…if we clear away the debris from a very poor August for most retailers, we see some interesting trends. Gap continues to post negative comps (but are very profitable due to cost and inventory controls – which will catch up to them very soon if they do not solve their top line problems). That’s a continuation of a trend.
The high end retailers of which I include Abercrombie and Fitch, Saks Fifth Avenue, Nordstrom and Neiman Marcus all had tough months. What would be really interesting to know is whether transactions were down or did they have to reduce prices and become more promotional, which meant their retails were lower than last year yet transactions held. It looks like of all the higher end retailers, Neiman’s either held their prices the best or suffered the least amount of traffic declines.
Then there are the hot retailers, which will always buck any ebbing economic trend. Buckle, American Apparel and my guess would be Urban Outfitters (although they report quarterly) performed brilliantly in August. During these times, kids are told they have just so much money to spend and they learn to spend it wisely on the stuff they REALLY REALLY want and these stores are who they choose. Pretty impressive stuff. That is the power of each of their brands that is shining through in this type of environment. I am sure they are the envy of most retailers out there.
As one would expect, the trend towards the “value” retailers is signified by the positive results at Wal-Mart, Costco, TJX (although surprisingly only recorded flat comps), Family Dollar, BJ’s Wholesale Club and Ross Stores posted positive comps in an anything-but-positive environment. These results do not surprise. What does surprise is how poorly Kohl’s and J.C. Penney performed. I guess they are continuing their poor trend this year but with all the uniqueness of offerings and exclusive brand related marketing and price points, I would have expected better results to sway the teens and college kids (or more specifically their Moms). They are obviously not executing where they should be and need to be careful to ensure they stay relevant in this hyper-competitive market.
The biggest surprise to me is Target. They have been bouncing around flat to slightly negative and slightly positive most of the year but with the current state of the economy and state of mind of the consumer, I would have expected them to post better than a negative 2 for August. Even though they were coming off a very good August last year, I expected them to continue to keep pace with Wal-Mart. Does that mean that Wal-Mart is making in-roads in apparel? I am not so sure after walking through a Wal-Mart Supercenter recently.
Interesting times for sure. The kids are not the only ones learning new lessons this time of year.