Bargain Chains Post Gains
Halloween offerings and fire-sale promotions were not enough to bring consumers back to the malls in October, retailers and analysts reported Thursday, as discount and value stores once again reported the only significant gains in retail sales.
Overall retail sales were barely better than flat, according to the Goldman Sachs retail composite index, with same-store sales up 0.9% as compared with last October. Discount stores gained 4.6% in the Goldman index as compared with the same period last year, but the overall gain was dragged down by a department store loss of 4.3% and a decline of 6.6% in specialty stores open at least a year.
Bank of Tokyo-Mitsubishi, in its survey of retail stores, tallied an overall retail sales gain of 2.3% as compared with a year ago. Bear Stearns’ weighted retail average put same-store sales at 2% better than last year.
“October’s numbers tracked slightly ahead of our expectation,” said Matt Fassler, a retail analyst with Goldman Sachs in New York. “Consumers clearly continue to buy consumables at an unfettered clip, but the apparel market remains very challenging and mall traffic is also a concern.”
The world’s largest retailer, Wal-Mart Stores Inc., once again proved a leader, with overall same-store sales up 6.7% compared with last October.
Target Corp., with a total sales number pulled down to 2% by its department stores division, posted a 4.1% sales gain for its namesake discount stores.
“The numbers came in a little bit better than expected overall and the tone was a little more favorable--but not much,” said Michael Niemira, an economist and retail analyst with Bank of Tokyo-Mitsubishi in New York. “It suggests that we’re slowly getting back to trend, which from January to September turned out to be 2.8%.”
Gains for the discounters in October versus a year ago, however, were losses for the department and specialty stores, which continued to suffer from slumping sales.
Federated Department Stores Inc., parent of Bloomingdale’s and Macy’s, reported an 8.7% decline in sales at stores open at least a year, in line with expectations. Sales at Neiman Marcus Group Inc.’s namesake luxury stores fell 8%; and Nordstrom Inc. reported a 5.8% decline despite significant promotions.
Slower mall traffic, particularly on the West Coast, where consumers were warned of possible terrorist threats to bridges, was no help to the already struggling specialty stores.
Long-suffering specialty apparel giant Gap Inc. posted sales down 17%, with double-digit declines in each of its brands, which include Old Navy and Banana Republic.
Abercrombie & Fitch Co., eager to protect profit at the expense of sales, reported a 20% loss in sales at stores open at least a year.
“Same-store sales,” or sales from stores open at least a year, are considered an important measure of a company’s overall health because the number excludes new and closed stores.
Still, some retailers were able to post positive numbers even in the specialty apparel sector.
American Eagle Outfitters Inc., which caters to the teen market, posted a 7.2% same-store sales gain. Children’s clothier Gymboree Corp. posted a 21% gain, on top of difficult comparisons with last October.
And despite bad news, most analysts are still predicting an overall gain for the holiday season.
“The trends should stay stable and we should manage to eke out some year-to-year growth,” Fassler said.
Shares in several department and specialty store chains fell. Federated fell 67 cents to close at $33.75, while Nordstrom declined 34 cents to $15.64, Gap lost 21 cents to $13.62, Abercrombie & Fitch dropped 82 cents to $18.28 all on the New York Stock Exchange. American Eagle gave up $1.72 to $28.81 on Nasdaq.
Among the gainers, Wal-Mart added 68 cents to $54.50, Target rose 24 cents to $34.35, Neiman Marcus rose 54 cents to $28.70 all on the NYSE. Gymboree improved 69 cents to $9.76 on Nasdaq.
