Retailers Report a Mixed Month
U.S. retailers on Thursday reported a better-than-expected 4.4% increase in November sales at stores open at least a year, as demand at specialty clothing and discount chains offset slow department store sales, according to a Bloomberg index.
So-called same-store sales were expected to rise as much as 4%, said Bank of Tokyo-Mitsubishi analyst Michael Niemira. November’s results are in line with his forecast that holiday sales will rise 4.5% to 5%, the same gain as last year.
November same-store sales rose 7.6% in November at Wal-Mart Stores Inc., the nation’s largest retailer, better than the 6% forecast. Casual clothing seller Gap Inc.’s sales jumped 16%, exceeding expectations of a rise of up to 12%.
Shoppers this holiday are expected to flock to low-priced name brands at discount retailers and fashions such as fleece and cargo pants at specialty apparel shops.
“We’re still on track for a solid holiday season,” said analyst Steve Paspal at Sovereign Asset Management, a unit of John Hancock Funds. “We’re seeing good strength across all categories except seasonal apparel.”
The warmest November in five years and competition with specialty chains hurt sales of winter clothing at department stores. Continued slow sales could force the chains to slash prices and erode profits during the fourth quarter, which can account for as much as 50% of a retailer’s annual profit.
“The department stores don’t have their finger on the panic button yet, but they’re nervous,” said Thomas Buynak, a director at Society Asset Management.
Sales could pick up in the latter part of this month, which typically accounts for half the season’s sales, analysts and investors said. Consumers tend to spend more toward the end of the holiday as retailers cut prices to draw last-minute sales.
Same-store sales rose 5.67% at discount stores and 8.38% at specialty stores, according to Bloomberg indexes.
Talbots Inc. posted a 14% increase and AnnTaylor Stores Corp. reported an 11% gain. Limited Inc.’s sales rose 8%, led by Thanksgiving weekend promotions.
Sales at Kmart Corp. rose 2.5%, less than it planned as weather hurt clothing sales. Dayton Hudson Corp.’s sales rose 3%, led by a 4.3% gain at its Target discount chain.
Department store sales fell 0.19% from a year ago, the third consecutive monthly drop, on slow clothing sales, according to Bloomberg indexes.
Sales at Federated Department Stores Inc., with chains such as Macy’s and Bloomingdale’s, fell 0.2%. May Department Stores Co., operator of Lord & Taylor, Filene’s and Hecht’s, said sales rose 0.1%.
Luxury department store chains reported higher sales. Markdowns led to a 9.9% rise in same-store sales at Neiman Marcus Group Inc. Saks Inc.’s sales rose 3%.
