The retailer had flat same-store sales in September, at the top end of its forecast range for a drop of 4.1% to flat sales. Thing is, these results will probably spur a bit of a rally for the stock, mainly because they weren't as bad as they could have been.
Following in the same line is Abercrombie & Fitch (NYSE: ANF), which reported a substantial 18% decline in same-store sales. However, expect some rejoicing as expectations called for a drop of 20.4%. Watch for ANF to turn in respectable performance rather than dropping as one may expect after reporting an 18% plunge in monthly sales.
Actually, while I focus on the companies that didn't do as bad as many thought, Aeropostale (NYSE: ARO) turned in an excellent month. This teen/tween retailer saw same-store sales increase a tidy 19%, far better than the expected 12.4%.
Of the three mentioned retailers, ARO has the easiest technical road higher. The shares are currently positioned in the $43 region, with little-to-no overhead resistance standing in the way. AEO and ANF both face overhead resistance and didn't turn in as good a report as ARO.
I expect these results will improve in October, November, and December as these retailers will drop prices for the Holiday season, and parents will want to find affordable gift options for their kids. Expect this scenario to play out across the entire retail sector. My one concern is that the companies may drop prices so low that the action will cut into their bottom line, but that is a bridge we will cross when the time comes.
Will Rich Ross really have a positive impact on Disney's movie operations?
Consumers sick of recession, may spend extra on holidays
Corrections, seasonality and Santa Claus
Add your comments