• Retailers reporting monthly sales numbers generally beat expectations.  We show 15 retailers beating their consensus comp store sales expectation for August 2010.  We show 5 retailers meeting their consensus comp store sales expectation for August 2010.  Only 5 retailers missed their consensus comp store sales expectations for August 2010.    
• There was no mention of greater tax-free sales holiday days in August 2010 versus LY.  Also, there was no mention of earlier BTS start dates in California.  August 2010 should have received a top-line boost.

The biggest question today relates to whether sales were pulled forward into fiscal August versus fiscal September.  A few companies (e.g. AEO, ROST) have suggested that it expects comp store sales to soften as the quarter progresses (are these softer expectations related to the “pulling forward” of sales or tougher comparisons?).  

• Many retailers explicitly suggested traffic trends were strong.  But, many of these same retailers suggested that average unit retails (AUR) declined versus LY.  Promotional activity is still the predominant theme at the mall today.
• Internet sales growth is slowing versus 1H 2010.  Only a few retailers reported Internet sales growth for August 2010 versus LY (JWN reported a meager +3.7% increase versus LY and KSS did not even bother to report the metric this month).  
• No companies adjusted their quarterly earnings expectations (typical since earnings season ended last week).  Next month will be action-packed (i.e. many EPS guidance revisions).   
• End of month strength or weakness?  BJ again reports negative comp store sales in week #4 (same as last month).  Yet, most retailers again suggest that week #4 was their strongest sales week of the month.    
• COST reports “slightly higher” food inflation in August 2010 versus LY.  This was less than July 2010’s disclosure of a +1.0% increase versus LY.    
• COST discloses that its Majors category (i.e. electronics) was “slightly negative” in August 2010 versus LY.  Televisions were again negative offset by strength in audio, cameras, navigation, and cell phones.   
• GPS reported a -5% traffic decline at the core chain in August 2010 versus -3% in July 2010.  Conversely, many other retailers disclosed higher traffic counts than LY (e.g. COST, FRED, KSS, TGT, TJX, and ZUMZ).  Gosh, even HOTT delivered flat traffic at its core chain.
• Our Compology this month is measuring relative top-line strength/weakness by comparing the comp store sales results in August 2010 versus July 2010.      
   

The following retailers reported relatively stronger comp store sales in August 2010 versus July 2010 (relative strength/improving trend): 

SMRT (+11.1% improvement in August 2010 versus July 2010)

BKE (+5.8% improvement in August 2010 versus July 2010)

WTSLA (+5.3% improvement in August 2010 versus July 2010)

The following retailers reported relatively weaker comp store sales in August 2010 versus July 2010 (relative weakness/worsening trend): 

SKS (-5.4% decline in August 2010 versus July 2010)

BONT (-4.3% decline in August 2010 versus July 2010)

• Looking Ahead by Looking Back… What happened in September 2009? 
  In September 2009, many retailers reported that comp store sales were stronger than expectations.

Retailers benefited from (1) the shift of Labor Day versus the prior year, (2) the lack of two hurricanes versus the prior year, and (3) weather that was conducive to sales of Fall apparel and accessories.  Teen retailers were the weakest performers in the month.      

No retailers explicitly reported merchandise margin weakness in September 2009.

Also, while grocery deflation was suggested as providing a material headwind at COST and BJ during the month, top-line pressure was decelerating. 

Week #2 was generally considered to be the strongest fiscal week in September 2009.  Week #3 was generally held to be the weakest.    

The Northeast, Mid-Atlantic, and Southwest were generally held to be the strongest comp store sales regions in September 2009.  The West was generally held to be the weakest comp store sales region in September 2009.