Mixed bag for retail in November

By Leslie Earnest

Dec. 1, 2006 12 AM PT

Times Staff Writer

Department stores and luxury retailers helped drive sales last month as the holiday shopping season shifted into high gear, but some big players stalled.

Guess Inc. sailed past expectations, Limited Brands Inc. notched a hefty gain and the parent company of Macy’s saw its business swell. On the other hand, sales slid at Abercrombie & Fitch Co., marked a 10th consecutive monthly decline at Gap Inc. and, for the first time in 10 years, fell on a same-store basis at Wal-Mart Stores Inc.

For nationwide retail chains as a whole, sales at stores open for a year or more advanced only 2.1% last month, down from a 3.8% gain in November 2005, according to the International Council of Shopping Centers’ tally. Excluding Wal-Mart’s decline, the industry recorded a 4% increase last month.

“The majority are posting stronger numbers than last year,” said analyst Jharonne Martis of data tracker Thomson Financial. “We feel pretty confident that the strong momentum will carry into the month of December.”

Many shoppers didn’t hold back. Nordstrom Inc. logged a 5.4% increase in sales while Saks Inc. jumped 7.2%.

Torrance resident Shane Wright, 25, rose at 3 a.m. the day after Thanksgiving to launch her holiday shopping. Before the day was over, she had unloaded $500 on toys, arts and crafts supplies and other items.

“I’m still spending, still spending,” said Wright, who guided her two daughters through Baldwin Hills Crenshaw Plaza mall this week, laden with shopping bags filled with new school clothes.

The homemaker said she expected to spend about $1,400 on holiday gifts, slightly less than in 2005. “PlayStation 3 and Xbox 360 are must-haves,” she said of the bestselling video game consoles.

Federated Department Stores Inc., parent of the Macy’s and Bloomingdale’s chains, was a winner, logging an 8.5% increase in November sales. Federated reported strong sales of youth apparel, housewares and accessories, including handbags, shoes and cosmetics.

Others that sprinted ahead included Los Angeles-based Guess, which posted a 12% increase, more than twice what analysts expected. Limited Brands was also a top performer, with sales up 12%

Not all department stores impressed. J.C. Penney Co. Inc., for example, logged a weaker-than-expected 1.4% increase.

Teen retailers also offered mixed results. American Eagle notched a 14% gain, nearly hitting analysts’ expectations, while Abercrombie & Fitch recorded a 3% decline instead of the 3% gain that Wall Street was looking for.

Gap, which operates about 3,200 Gap, Old Navy and Banana Republic stores, continued to disappoint analysts. The San Francisco retailer posted a 8% drop, more than the 5.4% decline that Wall Street was expecting.

Gap cited weak store traffic and said markdowns had put pressure on margins, a condition that is likely to persist this month. That prompted analyst Todd Slater at Lazard Capital Markets to downgrade the retailer’s stock to a “hold” rating. His report cited canceled orders at Gap, a lack of confidence in spring merchandise plans and a decline in morale at Old Navy.

Gap wasn’t the only California company that struggled. Pricey gadget seller Sharper Image Corp. of San Francisco posted a 27% decline.

Anaheim-based Pacific Sunwear of California Inc. fell 3.8% and Hot Topic Inc. in the City of Industry dropped 4.3%, but for each the results were better than Wall Street was expecting.

Wal-Mart reported its first same-store sales decline, a 0.1% dip, since April 1996. The behemoth set off jitters in the industry by predicting Thursday that December sales would range from flat to a 1% increase.

“If that happens, it does suggest that the industry numbers are likely to be softer than our expectations,” said Michael Niemira, chief economist for the shopping center group, who Thursday cut his projection of an increase in holiday sales from 3% to as low as 2.5%.

Wal-Mart is likely to further slash prices to spark sales, analysts said, prompting other companies to follow with competing discounts, last-minute bargains and holiday sales of all kinds.

That could cheer consumers while trimming retailers’ profits, said Ken Perkins of research firm Retail Metrics. “It’s looking like it’s going to shape up to be a very promotional holiday.”

leslie.earnest@latimes.com

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Holiday warmup

Year-over-year percentage change in November sales at stores open at least a year

Company: % change

Guess: +12.1%

Limited Brands: +12.0

Federated: +8.5

Target: +5.9

Wet Seal: +5.5

Nordstrom: +5.4

J.C. Penney: +1.4