KEY POINTS

  • Costco’s same-store sales growth accelerated in June versus the same period last year. Buckle, Cato and L Brands all reported comp improvement year over year.
  • Costco reported that comps increased by 9.7% year over year in June versus the 6.9% consensus estimate. Hardlines were up by low double digits year over year, with the majors, garden and tires departments among the better performers.
  • L Brands’ comps were up 3.0% in June. Victoria’s Secret’s comps were down 1% and Bath & Body Works’ comps were up 10%.

Costco’s June Comps Beat Expectations; Company Saw Strong Traffic Trend

  • Costco’s June same-store sales were up 9.7% year over year, beating the consensus estimate of 6.9%.
  • Traffic at Costco was up 4.4% in June worldwide, and up 4.6% in the US.
  • Costco’s e-commerce sales were up 27.7% in June, decelerating from 33.3% growth in May.
  • Within the US, the strongest sales regions were the Southeast, Midwest and Texas. Internationally, in local currencies, the company saw the strongest results in Mexico, Japan and the UK.
  • Cannibalization negatively impacted other international markets by more than 50 basis points and negatively impacted the US market by slightly less than 50 basis points.
  • Food and sundries comps were up by mid-single digits. Departments with the strongest results were tobacco, liquor and frozen foods. Hardlines were up by low double digits. Better-performing departments included majors, garden and tires. Sales in the majors department were up by a high-teens percentage, led by tablets, appliances and computers.
  • Softline comps were up by mid-to-high single digits. Better-performing departments included apparel, housewares and jewelry. Fresh foods were up by mid-single digits, with bakery and service deli among the better-performing departments.
  • Gasoline price inflation added approximately 275 basis points to Costco’s total reported comp sales. The average transaction value was up 27%, to $3.02, compared with $2.38 in June last year.

L Brands Reported Comp Growth Led by the Bath & Body Works Brand

  • Company comps were up 3% in June. Victoria’s Secret’s comps were down 1% and Bath & Body Works’ comps were up 10%.
  • L Brands’ merchandise margin rate was down in June, and below expectations, mainly due to additional promotional activity at Victoria’s Secret.
  • According to L Brands, the company’s semiannual sale had a soft start, with negative traffic levels. In response, the company extended the sale time period versus last year by two weeks and reduced pricing to drive traffic and clear inventory, which resulted in significantly lower merchandise margin rates.
  • At Victoria’s Secret, a decline in lingerie and PINK more than offset growth in beauty, leading to the 1% decline in comps.
  • At Bath & Body Works, comps were up 10% in June, driven by strong performance during the semiannual sale. The brand’s merchandise margin for the month was down, driven by the shift of additional semiannual sale days out of July and into June as a result of the calendar shift from the 53-week year.
  • Inventories per square foot were up 20% at month-end versus the end of June last year.

Buckle Reported Negative Comps, Price Decreases Weighed on Average Transaction Value

  • Teen retailer Buckle saw an overall comp decrease of 1.2% year over year in June, following a 3.6% increase year over year in May.
  • Total sales were up 3.5% year over year in the men’s business. Men’s represented 55.5% of total sales versus 52.5% in June last year. Price points were down 2.5% in the men’s segment.
  • Total sales for the women’s segment were down 6.0%. The women’s segment accounted for 44.5% of total monthly sales versus 47.5% last June. Price points were down 4.0% in the women’s business.
  • Accessories sales were down 7.5% year over year in June and represented 10.5% of total sales, down from 11.0% in June 2017. Footwear sales were up 6.0% in June and represented 6.5% of total sales, flat versus June 2017. The average accessory price point was up 2.0% and the average footwear price point was down 0.5%.
  • For the fiscal month, units per transaction increased by 1% and the average transaction value decreased by about 1.5% compared with the year-ago period.

Cato’s June Same-Store Sales Were Flat and Below the Company’s Expectations

  • Cato reported June sales of $72.9 million, down 2.0% year over year. Comps were flat year over year, and were below company expectations.
  • During the month of June, the company closed one store. At month-end, it operated 1,350 stores, down from 1,374 in the year-ago period.

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