5 November Retail Winners: Can They Survive December?
NEW YORK (
) -- Retailers reported better-than-expected November sales on Thursday, no doubt boosted by earlier promotions and strong sales Black Friday weekend. But the looming question remains: will consumers put a pause on shopping until it gets closer to Christmas?
Of the 25 retailers tracked by
TheStreet
, 18 beat November estimates, while just five fell short of forecasts.
There's no denying the holiday season started off merry, as shoppers spent more money per visit and flocked to online sites.
But looking into December, Wall Street Strategies analyst Brian Sozzi expects the first two weeks of the month will be quiet, as consumers reassess whether to spend more money then they originally budgeted.
And despite the gains, retail stocks are muted, as much of this good news has already driven shares in the sector up over the past several weeks. "Valuations are starting to creep up to loftier levels, which might give some reservation to put more money to work until valuations loosen up a bit," Sozzi wrote.
Nonetheless, retailers from across the board surprised Wall Street, with several standing out as notable winners.
Abercrombie & Fitch
Abercrombie & Fitch reported the strongest results of the month, surging 22%, significantly higher than the 6.8% uptick analysts predicted.
The teen retailer benefitted from its first-ever door buster at its Hollister chain on Black Friday, when it offered 30%-off the entire store until 12 p.m. At namesake store it doled out a $50 gift card for every $100 spent.
These promotions likely stole market share from competitors
American Eagle Outfitters
(AEO) - Get Report
and
Aeropostale
(ARO)
, both of which reported lackluster results during the month.
But this sales gain will wane, as the company said in a pre-recorded message that November was expected to be the strongest month of the quarter. Abercrombie is forecasting a same-store sales decline in January.
Shares of Abercrombie & Fitch are spiking 9% to $55.05 in morning trading.
Zumiez
Action sports retail
Zumiez
(ZUMZ) - Get Report
continued on its winning streak, posting a 20.7% spike in comparable sales. Analysts were looking for a gain of 12.6%.
The company also reported third-quarter profit more than doubled, marking the highest third-quarter profit in the company's history. During the quarter Zumiez earned $12.3 million, or 40 cents a share, compared with $5.1 million, or 17 cents, in the year-ago period.
Revenue rose to $135.9 million from $113.2 million last year, while same-store sales for the quarter grew 14.4%.
Wall Street was calling for a profit of 37 cents a share on revenue of $131.4 million.
Looking ahead, Zumiez now foresees fourth-quarter earnings between 43 cents and 47 cents a share, with same-store sales ranging from low double digits to mid-teens. Wall Street is predicting a smaller profit of 41 cents a share.
Limited Brands
Limited Brands once again beat expectations, with a 10% jump in same-store sales, versus consensus estimates of a 4% increase.
But despite this significantly higher November comparable sales report, the stock is lackluster, as investors were hoping management would lift fourth-quarter guidance.
Over the Black Friday weekend, its Victoria's Secret chain was able to drive significant traffic with limited promotions, which will likely benefiting margins in the quarter. The lingerie retailer offered free holiday totes with a $60 purchase until 12 p.m., while all bras were buy-one-get-one-50%-off, a promotion that continued throughout the weekend.
Gap
Gap reported its second consecutive month of positive same-store sales, but it might be too soon to tell if momentum will continue sans promotions.
The specialty retailer posted a 4% gain during the month, higher than the 2.6% forecast analysts issued. By division, namesake stores rose 5%, while both Banana Republic and Old Navy reported flat comparable sales.
This shouldn't come as too much of a surprise following Gap's impressive Black Friday promotions. At Gap stores shoppers received 50% off their entire purchase until 10 a.m. The company also offered 40% off purchases at Banana Republic and some discounts at Old Navy.
Macy's
Macy's
(M) - Get Report
upped its fourth-quarter outlook after reporting a 6.1% jump in same-store sales, better than estimates of a 5% increase.
The department store now expects same-store sales to rise between 3.5% to 4.5% in the period, up from a previous 3% to 4% estimate. It is also calling for fourth-quarter profit between $1.44 to $1.49 a share, from prior outlook of $1.42 to $1.47 a share.
Macy's CEO Terry Lundgren noted that the company saw strength at both namesake stores and its Bloomingdale's chain. "Black Friday weekend was particularly strong, bolstering our confidence as we enter the heart of the holiday shopping season," he said in a statement.
Online, 4.5 million shoppers visited Macy.com and Bloomingdales.com just on Black Friday, with similar traffic on Cyber Monday.
-- Reported by Jeanine Poggi in New York.
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