Retail sales weather Hurricane Irene, stock market storm
The nation’s retailers weathered stock market turmoil and Hurricane Irene in August, managing to post solid sales during the key month of the back-to-school season and offering hope for the crucial holiday shopping period just around the corner.
Sales at major chain stores rose 4.4% year over year, according to Thomson Reuters’ tally of 23 retailers, offering a barometer of steady consumer spending in an otherwise sluggish economy.
The hurricane had a mixed effect on retailers, helping discounters but hurting mid-priced apparel chains and department stores, many of which were forced to close during the storm on the East Coast.
Back-to-school sales, meanwhile, were up 3% in July and August combined compared with the same period in 2010, according to data service MasterCard Advisors SpendingPulse.
“Despite the weather impacts, sales continued to hold up,” said Michael Niemira, chief economist at the International Council of Shopping Centers, who estimated that sales growth nationwide would have been as much as 1 percentage point higher if not for the hurricane.
“It seems that the underlying pace for consumer spending continues to look good,” he said.
Discounters fared best, posting a combined 7.8% increase in August. Retailers such as Costco Wholesale Corp., Target Corp. and BJ’s Wholesale Club Inc. that sell basic household items benefited as shoppers spent heavily on bottled water, food and other necessities ahead of the hurricane.
Wal-Mart Stores Inc., the nation’s largest retailer, does not release sales results on a monthly basis.
The hurricane damped sales at several department stores, with J.C. Penney Co. and Kohl’s Corp. each reporting that sales slipped 1.9%. Macy’s Inc., which reported that sales rose 5%, said the hurricane lowered results by 1.5 percentage points.
“More than 100 of our stores, including some of the largest-volume locations in our company, were closed for all or part of Saturday on a very important shopping weekend because of Hurricane Irene,” Macy’s Chief Executive Terry J. Lundgren said. He added that business since Monday had been strong.
Apparel chains posted weaker results, with sales rising a meager 1%, although that was dragged down by a dismal performance by Gap Inc. The San Francisco clothing giant posted a 6% decline that missed expectations for a 3.8% drop.
“In our view, Gap had a challenging month in terms of sales and margins,” Brian Sozzi, an analyst at Wall Street Strategies, said in a note to investors. “Traffic was sparse during our mall walks, coinciding with a stepped-up pace of promotions to clear inventory that is generally not resonating.”
Retail sales are based on stores open at least a year, known as same-store sales and considered an important measure of a retailer’s health.
Retailers are looking to make up lost sales during Labor Day weekend, but analysts say they may be forced to discount to drive business.
High-end department stores were a bright spot again. Nordstrom Inc.'s sales rose 6.7% and Saks Inc. posted a 6.1% rise.
Luxury shoppers have been spending freely since late last year — good news for the economy because they wield outsized spending power — but economists are looking for a more even spread of spending.
August is the core of the back-to-school shopping period, the second-most-important time of the year for retailers (after the winter holidays).
Although the three-month season got off to a late start as many parents waited for discounts, retail analysts said school shopping so far has looked healthy.
Shoppers have generally been resilient, even with the stock market experiencing wild swings amid continued high unemployment and other weak economic indicators.
Thanks to her 7-year-old daughter’s recent growth spurt, Jeanne Young of Pasadena spent heavily on back-to-school gear this summer. At the Americana at Brand shopping center in Glendale this week, the investment manager and her daughter, Audrey, emerged from H&M with a bulging shopping bag.
“Everything in here is for her — a couple of sweaters, a couple of dresses,” Young said. “Her feet got bigger; she got taller. I had to buy the full wardrobe.”
Other shoppers continued to look for discounts as they shopped for their children. They included Rachel Ponce, a 37-year-old nutritionist from Studio City who was shopping at T.J. Maxx in Burbank recently. She said she was planning to buy just the basics for her daughter, who is entering kindergarten.
“Money’s tight, especially when you have two kids,” she said. “I’m not going to do a big shopping spree. We’ll probably just fill in the blanks: keep the pants and get a new shirt or something.”