In what is likely to be the beginning of an economic recovery, specialty retailers Gap Inc. (GPS), Aeropostale, Inc. (ARO) and Ross Stores, Inc. (ROST) reported healthy same store sales figures for the month of October. Buoyed by the better-than-expected results, Aeropostale and Ross raised their earnings forecast for the third quarter, while Gap said it expects earnings for the quarter to improve about 20% from the previous year.
Gap on Thursday reported increases in comparable store sales and net sales for October. The company's comparable store sales for October increased 4%, compared to a 16% decrease for the same month last year. Total sales for October rose 5% from prior year.
In Gap North America, same-store sales in October dropped 6%, compared to a 14% decline last year. Banana Republic North America posted a growth of 5% in same-store sales, compared to a drop of 17% last year. Comparable store sales at Old Navy North America was up 14%, compared to a negative 20% last year. In International, sales dropped 4%, in comparison with a 5% drop last year.
Gap's net sales were $1.14 billion for the four-week period ended October 31, 2009, up from $1.08 billion for the same period ended November 1, 2008.
For the third quarter, the company's comparable store sales were flat, compared to a decrease of 12% in the third quarter of the prior year. Gap's net sales in the quarter grew 1% to $3.59 billion from $3.56 billion in the previous year. On average, 23 analysts polled by Thomson Reuters expected revenues of $3.53 billion for the quarter.
Gap expects third-quarter earnings per share in the range of $0.42-$0.44, higher than $0.35 per share reported for the third quarter last year. On average, 38 analysts polled by Thomson Reuters expect the company to earn $0.38 per share for the quarter with estimates ranging between $0.34 and $0.43 per share. Analysts' estimates typically exclude special items.
Aeropostale said Thursday that same store sales increased 3% for October, compared to an increase of 1% in the year ago period. Same store sales for the third quarter increased 10%, compared to same store sales increase of 7% last year.
The retailer's total net sales for October increased 9% to $138.8 million from $127.4 million for the four-week period ended November 1, 2008. For the third quarter, total net sales increased 18% to $567.8 million from $482 million in the year ago period. Twenty-six analysts had a consensus revenue estimate of $571.73 million for the quarter.
Aeropostale said it made a seamless transition into its holiday floor set, while managing its back to school clearance inventories. The company also noted that its merchandise margins increased significantly from last year, and its inventories remain well controlled and on plan.
Encouraged by the better-than-expected results for the month, the company raised its third-quarter forecast for net earnings to a range of $0.90-$0.91 per share from the previous outlook of $0.84-$0.85 per share. The company reported earnings of $0.63 per share in the third quarter of 2008.
Analysts expect third-quarter earnings in the range of $0.84-$0.92 per share with a consensus of $0.87 per share.
Ross Stores said Thursday that same store sales for the month rose 9%, while total sales grew 14%. Comparable store sales for the quarter ended October 31, 2009 were up 8% on top of flat same store sales in the prior year period.
The company reported that sales for the four weeks ended October 31, 2009 increased to $557 million from $490 million for the four weeks ended November 1, 2008. For the thirteen-week-period, sales were $1.744 billion, up 12% from last year's $1.555 billion in sales.
The company noted that both sales and margins were well ahead of its expectations during October as well as the third quarter. Merchandise and geographic sales trends during the month were relatively broad-based. Shoes, Dresses and Home remained the top-performing categories. The Southwest, Southeast and California were the strongest regions, Ross said.
The company raised its third-quarter earnings per share outlook range to $0.83-$0.84 from the prior guidance of $0.75-$0.77. Ross reported third-quarter earnings of $0.44 in 2008. Analysts expect earnings in the range of $0.64-$0.82 per share with a consensus of $0.76 per share.
Same-store sales are a key measure of a retailer's strength, as it records sales at established stores. Due to the economic crisis, shoppers have been careful about spending, leading to a near-halt to discretionary spending, and lower revenues for retailers.
However, the economy is slowly beginning to recover. The third quarter witnessed a more-than-expected economic activity in the U.S. A report released by the Commerce Department recently showed an increase in gross domestic product following four consecutive quarters of contraction.
The Commerce Department said its advance estimate showed that GDP increased at an annual rate of 3.5% in the third quarter, compared to a 0.7% decrease in the second quarter. Economists had been expecting GDP to increase by 3.2%. With the bigger than expected increase, GDP rose at its fastest rate since the 3.6% growth that was seen in the third quarter of 2007.
The data showed that a jump in consumer spending contributed to the stronger than expected GDP growth, with spending increasing by 3.4% in the third quarter, following a 0.9% decrease in spending in the second quarter.
GPS is currently trading at $22.56, up $0.47 or 2.08%, on 3.56 million shares.
ARO has dropped 12.96% and is currently trading at $32.95, down $5.09, on 4.95 million shares.
ROST is currently trading at $45.05, up $0.14 or 0.31%, on 397K shares.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.