In a report issued Friday, Wedbush analysts Morry Brown and Taryn Kuida shared a recap of August retail sales, which came in mixed, but largely in line with expectations. “Labor Day shift more than offsets [the] early month tax holiday benefit,” the report stated. Same store sales also came in relatively in line with projections.
The experts highlighted L Brands Inc LB’s “impressive comp performance” as the main driver of the month’s same-store sales.
Meanwhile, Gap Inc GPS’s comp miss was attributed to the move of Labor Day weekend from August to September.
Below is a closer look at some company-specific comments from the research note.
Buckle
Buckle Inc BKE reported a 3.3 percent decline in comps over August. While results came in slightly below estimates, they still implied a 500 bps surge “on a two-year stack basis from July – suggesting the calendar impact meaningfully hurt July.”
The women’s segment continues to underperform, having posted a 10 percent fall in comps, while men’s reported an 11 percent surge for August.
Denim was also soft, and, if it “does not strengthen in September, the view that BKE could be a beneficiary of improving trends in the category would appear more suspect,” the note concluded.
Gap
August saw Gap’s same-store sales decline by 2 percent, falling short of estimates, which called for at least flat comps. The analysts note that, “The benefit from the tax holiday shift was more than offset by the negative impact of Labor Day weekend moving from August to September. The month of August decelerated 300 bps on a two-year stack basis compared to July,” with Gap decelerating 500 bps and Banana Republic, 900 bps.
On the other hand, Old Navy witnessed a 200 bps acceleration.
The experts highlighted that “Banana Republic was negatively impacted the most by the shift because they benefit the least from the tax free holiday, while Old Navy benefited from a strong BTS season.”
L Brands
Finally, L Brands, the outperformer, delivered robust August same-store sales growth of 6 percent, well above consensus of 2.5 percent. “Merchandise margins were indicated up year-over-year while inventory was up 2 percent in August,” the report added. “Looking ahead, management guided to a L-MSD comp for September.”
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