7 Retailers Bullish on October Sales
NEW YORK (
) -- October retail same-store sales were a mixed bag of tricks and treats.
Of the 26 retailers tracked by
TheStreet
, 14 beat expectations, 10 missed forecasts and one fell in-line with estimates.
Overall, October same-store sales gained 1.6%, according to the International Council of Shopping Centers, falling short of estimates of a 2% to 2.5% increase.
"Sales performance for the month was sluggish as warmer-than-normal weather curbed demand for fall merchandise," Michael P. Niemira, chief economist and director of research for ICSC said.
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While there were some winners for the month, with several retailers upping third-quarter guidance, UBS analyst Roxanne Meyer warns that the wildcard is how many of these earnings revisions were helped by stock repurchase activity.
Regardless, it's a welcome shot of optimism for the beleaguered retail sector heading into the crucial holiday season.
Here's a look at retailers who have become more bullish on the second half of the year.
Macy's
Macy's
(M) - Get Report
lifted its profit expectations for the second-half of the year, as October same-store sales grew 2.5%. This compares with a 1.6% uptick analysts predicted.
The department store is now looking for earnings in the range of $1.50 to $1.55 per share, compared with prior guidance between $1.45 to $1.50 per share. Wall Street is calling for a profit of $1.52 for the final two quarters.
Macy's also predicts fourth-quarter same-store sales will increase between 3% and 4%, which translates to comparable sales rising between 3.3% and 4% in the second half. The company originally estimated a sales gain between 3% and 3.5% for the period.
American Eagle Outfitters
Despite reporting a decline in October same-store sales and missing Wall Street's estimates,
American Eagle Outfitters
(AEO) - Get Report
once again upped its third-quarter outlook.
The teen retailer is now expected to earn between 28 cents and 29 cents per share, in-line with forecasts. American Eagle previously lifted its outlook in September to a range of 27 cents to 28 cents. This compares with a profit of 25 cents in the third-quarter last year.
American Eagle attributed the upgrade to better-than-expected margins, which were boosted by a lower level of markdowns.
In October, comparable sales fell 2%, missing estimates of a 1.4% increase.
Ross Stores
Ross Stores
(ROST) - Get Report
was one of the surprises of the month, as sales gained 4%, compared with consensus estimates of a much smaller 0.8% uptick.
Dresses and home goods were the top-performing merchandise categories for the month, while Florida was the stronger market.
As a result, the off-price retailer now expects third-quarter earnings in the range of $1.01 to $1.02 a share, a 20% surge over third-quarter earnings in 2009. Ross will report third-quarter earnings results on Nov. 18.
Shares of Ross are advancing 5% to $63.39 in Thursday trading, as investors breath a sigh of relief. There has been some tension mounting around the off-pricers, which were standouts amid the recession, as sales have slowed over recent months.
TJX
TJX
(TJX) - Get Report
reported flat sales in October, ahead of the 0.8% decline Wall Street predicted.
The off-price retailer now expects third-quarter earnings to come in at the high-end of its range of 89 cents to 91 cents per share. Analysts have a forecast of 91 cents.
"We are in a great position to make the right buys and flow the right merchandise into our stores throughout the holiday season and continue to see opportunities to drive sales and margins in the fourth quarter," said Chief Executive Carol Meyrowitz.
Zumiez
Zumiez
(ZUMZ) - Get Report
has become the standout of the teen space and one of the few growth stories remaining.
The stock is one of the biggest gainers this afternoon, running up 13% to $28.64.
The skate- and surf-inspired retailer reported a 21.5% surge in same-store sales, significantly outpacing the consensus forecast of 7.5%.
On the heels of this massive spike in demand, Zumiez raised its third-quarter guidance to a range of 36 cents to 37 cents per share. The retailer previously predicted profit between 28 cents to 30 cents.
"The investments in inventory, systems and talent are beginning to pay off," analyst Jennifer Black, of the firm bearing her name, wrote in a note. "Zumiez never deviated from its roots and maintained its course even during the worst of times. During the meltdown -- as other companies were cutting staff and expenses -- Zumiez remained committed to its employees and without laying anyone off and as a result, the company is now firing on all cylinders."
Limited Brands
Limited Brands
(LTD)
remains a top bet in the retail sector.
The owner of Victoria's Secret and Bath & Body Works reported a 9% jump in October same-store sales, compared with estimates of a 6.1% gain.
Limited Brands now expects third-quarter earnings between 15 cents and 17 cents per share, up from a much more muted guidance of 3 cents to 8 cents. Analysts are expecting a profit of 11 cents.
Shares of Limited at gaining 4.2% to $31.08.
Gap
Gap
(GPS) - Get Report
provided the biggest "wow" factor of the month, reporting a surprise jump in same-store sales.
The news sent shares rising 6.7% to $20.54 in afternoon trading.
The specialty retailer saw sales climb 2%, better than the 2.5% decline Wall Street predicted. By division, namesake stores grew 5%, Old Navy rose 1% and Banana Republic slipped 1%.
Gap issued third-quarter earnings ahead of analysts forecast, calling for profit between 47 cents and 48 cents per share. Wall Street is looking for earnings of 44 cents.
--Written by Jeanine Poggi in New York.
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