Thursday, November 1, 2012

SUMRX October Same Store Sales Review— Upside monthly results and guidance trump Sandy concerns

The majority of retailers reported October Same Store Sales before the open today. Results can be accessed on our Same Store Sales calendar.

Overall October results topped expectations (twelve beat consensus estimates, six missed). Half of the names that missed still reported upside Q3 guidance (LTD, GPS, ROST). Most of the retailers provided Q3 updates with their October comps results (ahead of earnings releases—report mid to late November)... Upside guidance: BKE, BONT, GPS, KSS, LTD, M, ROST, SMRT, TJX, WTSLA... Downside Guidance: ZUMZ... Reaffirmed/in-line guidance: CATO, JWN, HOTT

Better than expected October results and guidance is helping boost retail names despite any lingering concerns that Hurricane Sandy has deterred and disrupted discretionary shopping (results for the month included sales through Saturday October 27). The retail sector is modestly outperforming the overall strong market following October Same Store Sales results and guidance. The SPDR Retail (XRT) is +1.4%, Consumer Dis Spdr (XLY) +1.3%, S&P Retail (RLX) is 0.7%, Retail HOLDRS Trust (RTH) +0.6%, vs S&P500 index (SPX) +1.1%.

Some cos that beat October Same-Store Sales estimates include (listed according to the magnitude of the beat):
  • Wet Seal (WTSLA) reported Oct comps of -7.6% vs -13% consensus, sees Q3 EPS at high end of prior range and reported prelim Q3 sales above consensus. The stock opened flat and is now up ~4%.
  • Buckle (BKE) reported comps of 3.8% vs -1% consensus (as usual no guidance or commentary). The stock opened 1.2% and is now ~5% higher.
  • Nordstrom (JWN) reported comps of 9.8% vs 6.5% consensus and prelim Q3 sales in-line. The stock opened modestly higher and is now ~1% up on the day.
  • Stage Stores (SSI) reported comps of 6.5% vs 3.3% consensus and prelim Q3 sales above consensus. The stock opened 1% higher and has continued to climb (now up ~5%).
  • TJX Cos (TJX) reported comps of 7% vs 4% consensus, raised Q3 EPS guidance (in-line with consensus) and raised FY13 EPS guidance. The stock opened 3.2% higher and is still near that level.
Some cos that missed October Same-Store Sales estimates:
  • Zumiez Inc (ZUMZ) reported comps of 0.6% vs 4.4% consensus, lowered Q3 EPS guidance and was downgraded by multiple analysts. The stock opened 13% lower and is still near that level.
  • Limited (LTD) reported comps of 3% vs 5.6% consensus, reported prelim Q3 sales in-line but raises Q3 EPS guidance. The stock opened 3% lower and is still down ~2% on the day.
  • Gap Inc (GPS) reported comps of 4% vs 5.6% consensus but issued upside Q3 EPS/sales guidance. The stock opened flat and is now ~1% lower.
  • Rite Aid (RAD) reported comps of -1.1% vs -0.5% consensus. The stock opened slightly lower and is now down ~3%.

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