2nd UPDATE: Retailers Post First Sales Gain In Year

(Recasts first paragraph to include industrywide figures from Thomson and updates with analyst reaction and stock prices.)

 
   DOW JONES NEWSWIRES 
 

Retailers in September collectively posted their first growth in same-store sales since August 2008, with positives reported across an industry mired in a several-year slump.

The September showing prompted a number of retailers, including Target Corp. (TGT), J.C. Penney Co. (JCP) and Kohl's Corp. (KSS) to issue optimistic earnings outlooks. Meanwhile, Victoria's Secret parent Limited Inc. (LTD) reported its first same-store-sales increase since August 2007.

But not is all well, as the year-to-year comparison benefited from factors including a later start for many schools and weakness last year, making the ability to show growth much easier than had been the case throughout 2009.

Still, September may have seen some of the much talked about "pent-up demand" being released by consumers after they have hunkered down during one of the worst recessions on memory.

"We like to shop in America," said Craig Rowley, global leader for retail at consulting firm the Hay Group. "And there is some sentiment on the part of the consumer that the worst of the economic downturn is over."

Retailers have been suffering for more than a year as consumers have continued to be less free with their spending. But starting in September, comparisons with year-earlier results became notably easier.

Thomson Reuters' same-store-sales index rose 0.6% for September. With that increase, the industry avoided what would have been the first time this decade that the same month had two straight years of same-store sales decline.

Teen-apparel chains, which were projected to be the worst performer as a group, had the biggest outperformance as same-store sales fell 2.8%. That is less than half the drop that was expected.

Abercrombie & Fitch Co. (ANF) was again the weakest performer, but its 18% slump for September was a bit less than expected. The company has recorded big declines for months as price-conscious shoppers instead go to cheaper rivals like Aeropostale Inc. (ARO). It had a 19% surge, prompting the company to increase its fiscal third-quarter profit target. American Eagle Outfitters Inc. (AEO) also projected earnings at or above its prior forecast.

The trio saw their stocks rise on the news.

Department stores also showed improved performance, with Macy's Inc. (M) posting an 2.3% drop - half of what analysts estimated - while struggling smaller peer Dillard's Inc. (DDS) also had a narrower-than-expected decline. J.C. Penney and Kohl's also topped estimates, helping to prompt their boosted forecasts. Penney's shares fell 1.6%, while the others were little changed.

The segment with the smallest outperformance was discounters, which had been among the best performers in the retail industry. The shift has been partially due to the effects of slumping gasoline prices and currency changes on BJ's Wholesale Club Inc. (BJ) and larger rival Costco Wholesale Corp. (COST). BJ's on Thursday posted a 5.5% gain excluding gasoline sales, another month of outpacing peers but below analysts' expectations. That helped push the stock down 3.7% in early trading. Costco on Wednesday reported a 3% rise on that basis in the U.S., double estimates.

Off-price apparel sellers TJX Cos. (TJX) and Ross Stores Inc. (ROST) have been posting some of the best results of late, and they had growth of 7% and 8%, respectively, again topping expectations. Shares of both gained.

Also, Gap Inc. (GPS) posted a roughly in-line 1% drop. Its long-struggling Old Navy chain reported surprise growth in August and posted a stronger-than-expected 13% jump for September - the biggest gain in 5 1/2 years. The company added that merchandise margins for the month were significantly" above year-earlier levels.

-By Kevin Kingsbury, Dow Jones Newswires; 212-416-2354; [e-mail]

(Karen Talley contributed to this story.)