Retail Sales Climbed in August Despite Hurricane Irene and Low Consumer Confidence

Despite waning consumer confidence and a heap of negative economic data, some top U.S. retailers have already reported better-than-expected August sales. Thomson Reuters tracks 25 retailers, with 19 reporting so far today, of which 11 beat expectations while a total of 15 reported an increase in sales, though for 4 of them, the increase was below what had been expected.

Late Wednesday, Costco (NASDAQ:COST) reported an 11% rise in sales for the month of August, beating Reuters’ expectations of a 9.3% increase. The warehouse club and discount retailer benefited from “an upper middle-income consumer continuing to be fully engaged in the process of saving where applicable,” said Wall Street Strategies analyst Brian Sozzi.

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Limited Brands Inc. (NYSE:LTD), the parent company of retailers like Victoria’s Secret and Bath & Body Works, also posted an 11% rise in same-store sales last month, beating analysts’ forecast of 7.6%, as well as its own estimates for a high-single-digit percentage rise.

With August being the peak of back-to-school shopping, the second-most important shopping period in the year after the year-end holiday season, weak economic indicators and the threat of Hurricane Irene looked as though they might dampen sales. But despite store closings all along the East Coast this past weekend, sales held up, offering hope that if sales can keep up in August despite the S&P downgrade, a huge market sell-off, and extremely low consumer confidence, they just might be the one positive trend to be counted on. June and July both reported better-than-expected sales as well.

And sales could have been even better last month had it not been for Hurricane Irene, which shut down malls and retailers all along the coast from North Carolina up to Vermont on one of the key back-to-school shopping weekends, hurting sales of items like clothes, shoes, and electronics. According to Thomson Reuters, clothing retailers will show the smallest gains in August. And with a lot of unsold merchandise on their hands, retailers will have to offer discounts to clear it in order to make room for new merchandise, which could hurt their quarterly profit margins.

Meanwhile, the hurricane may have helped discount chains and drugstores to even bigger increases, with sales of hurricane-related products like flashlights, batteries, and bottled water giving them a boost. Of course, since many retailers’ August reporting periods ended on Saturday, the storm’s full impact on sales will not be known until September sales are reported. Furthermore, not all major retailers report monthly sales, including Home Depot (NYSE:HD) and Wal-Mart (NYSE:WMT), both of which likely experienced increased sales in August due to the hurricane and the back-to-school shopping season, respectively.

However, while the back-to-school shopping season might be partly responsible for increased August sales, Madison Riley, managing director of retail consulting firm Kurt Simon, says that shoppers have been inspired by pent-up demand for goods after cutting back for months. Still, Riley says they have mostly been looking for bargains, which means retailers might be doing best with sales of marked-down products with low profit margins.

Here’s your cheat sheet to all of Reuters’ retailers reporting same-store sales so far today, in terms of reported sales versus Thomson Reuters’ estimates: