Retailers Report Sluggish Sales In October
Thursday, November 8th 2007, 8:10 am
News On 6
NEW YORK (AP) _ The outlook for the holiday shopping season grew bleaker Thursday after retailers announced disappointing October sales results due to consumers' ongoing worries about the housing slump and higher energy prices.
The downbeat news came from all sectors including mall-based apparel stores like Limited Brands Inc. and department stores like Macy's Inc. Even upscale Nordstrom Inc. posted a rare sales decline while Wal-Mart Stores Inc., the world's largest retailer, posted sales that were below expectations despite its aggressive discounting heading into the holidays.
``Overall, the sales trend continues to slow,'' said Ken Perkins, president of RetailMetrics LLC, a research company in Swampscott, Mass. ``I think the consumer is certainly feeling the (economic) pressure heading into the holidays.''
Milder than normal weather also affected sales, wiping out consumers' appetite for winter wear.
According to Thomson Financial, 18 retailers missed expectations, while 10 beat projections. The tally is based on same-store sales or sales at stores opened at least a year and are considered a key indicator of a retailer's health.
With Dec. 25 about seven weeks away, the retail industry is struggling with consumers' eroding confidence and a weakening sales trend amid mounting problems in the economy. Throughout the year, shoppers have been faced with higher gas and food bill and depreciating value of their homes. Tighter credit has also become an issue in recent months. And while last week's move by the Federal Reserve to cut a key interest rate by a quarter-point will make it cheaper to borrow money, economists say it may be too late to help boost holiday spending.
Amid such challenges, many stores including Wal-Mart and Toys ``R'' Us Inc. aimed to jump start the season early this year by offering door busters and big discounts starting last weekend. But shoppers don't seem to be in a hurry to buy.
Wal-Mart posted a 0.4 % gain in same-store sales. The results were below the 1.1 % gain expected by analysts polled by Thomson Financial. Same-store sales are a key indicator of a retailer's health. In a release, it said sales of Halloween merchandise were solid across all departments, but seasonal categories related to cold weather including apparel and home furnishings were weak.
The company forecast that same-store sales growth will be no more than 2 % in November. Wal-Mart,which kicked off its holiday discounts with price cuts on toys in early last month, promised that it will continue to be aggressive in its price cutting throughout the season.
Rival Target Corp., which stumbled in September with disappointing results, fared well in October, posting a 4.1 % gain in same-store sales. Analysts expected a 2.5 % gain.
Costco Wholesale Corp. had a 9 % gain in same-store sales, well exceeding the 5.7 % estimate.
Among department stores, Nordstrom, which reported a weaker-than-expected 3.2 % same-store sales gain in September, posted a 2.4 % drop in October. Analysts had expected a 1 % gain.
Macy's had a 1.5 % decline in same-store sales, worse than the 0.6 % decrease forecast.
Limited had a 6 % drop in same-store sales, worse than the 1.6 % drop expected by Wall Street.
Pacific Sunwear had a 0.8 % decline in same-store sales; analysts expected a 2.8 % increase.
Wet Seal had a 4.5 % decline in same-store sales, worse than the 2.1 % decrease expected.