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United States News Title: Retail Sales Cool; Low End Hurting NEW YORK -(Dow Jones)- Shoppers in October cooled their spending after big splurges during the previous month, marking a pause before the start of the all-important holiday season. Department stores from Nordstrom Inc. (JWN) to Kohl's Corp. (KSS) rang up big sales of fall fashions as brisk temperatures stoked demand for coats, sweaters, leggings and other cold-weather gear. Elsewhere in the mall, however, fortunes were mixed, with specialty stores such as Gap Inc. (GPS) and AnnTaylor Stores Corp. (ANN) missing forecasts. Gains at discounters also were less robust, as many faced more difficult comparisons with a year earlier. "Put it all together and you have a decent picture," said Michael Niemira, chief economist at the International Council of Shopping Centers, a New York-based trade group. "But it's a tale of two consumers: The department-store shopper is buying like no there's no tomorrow, but then you have everybody else." Retailers posted a collective 2.3% increase in same-store sales, or sales at stores open at least a year, according to an index of 46 major chains compiled by Lazard Capital Markets. That was short of the investment firm's 2.8% estimate, as well as the index's 3.8% gain in September. The slower-than-expected pace raised concerns among some analysts about the momentum of the holidays, as a shaky housing market looms over middle- and upper-income consumers. Nevertheless, a number of chains reported that margins were healthy, as September's frenzy left less inventory on their sales floors. Retailers that raised their profit outlooks included J.C. Penney Co. (JCP), Limited Brands Inc. (LTD) and American Eagle Outfitters Inc. (AEOS). Meanwhile, downbeat forecasts from the likes of Gap and Chico's FAS Inc. (CHS) looked to be in the minority. "There wasn't a big catalyst to get people out shopping in October, and there wasn't a significant amount of new product," said Janet Hoffman, managing partner of Accenture's North American retail practice. "With the next release of new holiday product, I'm confident we'll have a holiday season to be proud of." Wal-Mart Stores Inc. (WMT) was the key culprit weighing on overall results, posting a tepid 0.5% increase that was short of its original 2% to 4% forecast and its weakest since December 2000. The Bentonville, Ark., retailer said a store-remodeling program came to a head during the month, disrupting customer traffic. The remodeling efforts will be curtailed within the next two weeks to make way for holiday traffic. But sales also were hurt by sluggish demand for fall apparel including its new Metro 7 line, which many of its customers found overly trendy. Wal-Mart said the flopped fashions will continue to damp results through the holidays. It added Thursday that it expects its November same-store sales will be roughly flat with a year ago. That's "a big disappointment," says Arun Daniel, an analyst at ING Investment Management Inc. Investors have been hoping for weeks that Wal-Mart's lower-income customers would ramp up their spending soon following a drop in gasoline prices that happened in August. "It's taking longer than anybody anticipated - including me," Daniel says. In response, he expects Wal-Mart to get aggressive on prices as the holidays gear up this month. That will likely pressure margins at competitors, but Daniel says it won't likely stimulate big sales gains until December, as shoppers have been trained to wait until the last minute for big Christmas markdowns. The news from discounters wasn't all bad. Costco Wholesale Corp. (COST) reported a 4% gain in same-store sales despite a tough comparison with a 10% increase a year earlier. Still, that gain fell short of the 4.6% increase analysts had expected, according to Thomson First Call. Target Corp.'s (TGT) 3.9% gain was in line with its 3% to 5% forecast, but slightly short of the consensus for a 4.2% increase. San Francisco-based Gap continued to struggle despite hopes for help from its recent "skinny black pants" campaign with Audrey Hepburn and a "Project Red" clothing line launched mid-month that is tied to a campaign against AIDS in Africa. Same-store sales fell 7% in October, steeper than the 2.7% drop analysts expected. Likewise, out-of-fashion teen retailers Pacific Sunwear of California Inc. (PSUN) and Hot Topic Inc. (HOTT) posted same-store sales drops of more than 7% each. Abercrombie & Fitch Co.'s (ANF) fell 3% from a year ago, when its same-store sales surged 31%. It also was a bumpy month for women's clothiers struggling to keep up with fall fashion trends. AnnTaylor Stores reported a 0.5% decline amid weakness at its lower-priced Loft chain, surprising analysts who were looking for an increase. Chico's posted a 4.1% decline and said third-quarter earnings will fall below Wall Street's forecasts. Talbots Inc. (TLB) backed its third-quarter outlook but noted that sales slowed in October. Its shares fell 5% recently, to $25.88. Some of those sales may have been stolen away by mall anchors including Federated Department Stores Inc. (FD). The owner of Macy's and Bloomingdale's, which has mounted an aggressive fall ad campaign, said its same-store sales rose a healthy 7.7%. But that figure excluded results from more than 400 stores acquired last year from May Co. Those stores, which were converted to Macy's in September and nearly doubled the size of the chain, "continued to lag," Federated said. The former May stores are likely giving up customers to other chains, too, as Federated takes them more upscale under the Macy's brand, says Stephen Hoch, a marketing professor at the University of Pennsylvania's Wharton School. Mid-price department stores, Kohl's and J.C. Penney chief among them, also continue to benefit from a rash of store closures that followed the merger, he says. "A hundred big stores were taken out of circulation, and that left a bunch of money on the table," Hoch says.
Poster Comment: Investors have been hoping for weeks that Wal-Mart's lower-income customers would ramp up their spending soon following a drop in gasoline prices that happened in August.. .. LMAO AT THE RECSSION THAT IS COMING...BECAUSE OF HIGH GAS PRICES
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