Retailers’ Holiday Outlook Brightens

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The New York Sun

NEW YORK – The holiday outlook brightened a bit yesterday as many national retailers reported better sales in October, but discounters had another month of lackluster results.


Many mall-based apparel stores, including Limited Brands, Talbots, and Gap, saw a rebound in spending, helped by cooler weather. Wal-Mart and ShopKo Stores were among discount merchants extending a sluggish streak that began in June.


“There was definitely more broad based growth across the apparel group. But the low-end consumer continues to be hurt on two fronts – jobs and wage growth, and higher energy prices,” said Ken Perkins, an analyst at RetailMetrics LLC, a research firm in Cambridge, Mass. “This is a little more encouraging as we head into the holiday season, though it is not a harbinger for a stellar shopping season.”


Even in more secure economic times, it’s hard to tell from October sales how the holiday season will fare – whether consumers will shop enthusiastically from the start or put off their buying until late December and force retailers to slash their prices.


Many storeowners are uneasy about the holidays, especially after the Conference Board reported last week that consumer confidence fell to a seven-month low in October.


It’s clear shoppers will be looking for value. The upscale discounter Target Corp., for one, reported a 6% gain in sales from stores open at least a year. Analysts surveyed by Thomson First Call had expected a 5.6%. Total sales were up 12.6%.


So-called same-store sales are considered the best indicator of a retailer’s performance.


The International Council of Shopping Centers-UBS sales tally of 71 retailers rose 4.0% in October, reaching the high end of expectations. That was the best performance since May, when retailers recorded a 5.7% gain, chief economist Michael P. Niemira said. In September, retail sales were up 2.4%.


Wal-Mart recorded a 2.8% increase in same-store sales. Analysts surveyed by Thomson First Call expected a 3% gain. Total sales were up 10.4%.


Discount retailer ShopKo recorded a 3.1% decline in same-store sales. Analysts expected a 1% gain at ShopKo; its total sales fell 2.9%.


On the other hand, clothing chains Gap and Talbots’s gains both outstripped Wall Street estimates. Limited reported a robust 14% increase in same-store sales in October, only slightly below Wall Street’s estimate.


Within department stores, strong appliance sales helped Sears, Roebuck and Company to a 1.9% same-store sales increase in domestic business in October, better than the 0.5% decline Wall Street expected. Total sales were up 0.1%.


J.C. Penney Co. had a 2.1% gain in sales at its department store business, slightly better than the 2.2% forecast. Total sales were up 2.3%.


Federated Department Stores reported a 4% increase in same-store sales, surpassing the 2.6% analysts expected, as it enjoyed a post-hurricane sales rebound in Florida. Total sales rose 3.8%. But the company, whose stores include Macy’s and Bloomingdale’s, warned that same-store sales in November would be up no more than 2%.


High-end stores again posted robust gains.


Neiman Marcus Group, which operates Bergdorf Goodman and Neiman Marcus stores, had a 13.6% gain in same-store sales in October, surpassing the 8% Wall Street expected. Total sales gained 13.7%. Saks also beat estimates.


The New York Sun

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