Retailers report strong gains for September, aided by cooler weather and falling gas prices
Thursday, October 5th 2006, 8:49 am
News On 6
NEW YORK (AP) _ Shoppers, encouraged by cooler temperatures and falling gasoline prices, went on a shopping spree in September, giving many retailers better-than-expected gains and lifting the industry's spirits two months before the holiday season. A notable exception was Wal-Mart Stores Inc.
As retailers reported their results Thursday, the winners crossed many categories, with department stores and teen merchants including Bebe Stores Inc., J.C. Penney Co. Inc. and Federated Department Stores Inc. among the leaders.
``This is a really strong month,'' said Ken Perkins, president of RetailMetrics LLC, a research firm in Swampscott, Mass. ``The back-to-school momentum was strong, weather was really favorable and the big plummet in gasoline prices certainly put more disposable money into consumers' wallets.''
Of the first 44 retailers to report September results, 32 topped analysts' expectations and 12 fell short, according to Thomson Financial.
The news was encouraging because analysts had braced for a consumer spending slowdown in the second half of the year as the economy cooled. But the deteriorating housing market remains a big concern. In the last few years, a booming home sales and record-low interest rates spurred spending as consumers taped into their rising home equity.
Meanwhile, although the Conference Board reported last week a rebound in consumer confidence in September, the survey showed lingering concerns about the job market. Employment showed modest gains in August, with wages barely up, and analysts are forecasting only a modest increase of 120,000 jobs for September. The Labor Department will report that figure Friday.
Still, declining gasoline prices, which have fallen 50 cents a gallon in recent weeks, should help ease concerns about the job market. Economists had worried that rising energy costs would derail the labor market as companies look to cut costs by laying off workers.
Wal-Mart, the world's largest retailer, said its same-store sales, those from stores open at least a year, rose 1.3 percent, well short of the 2.1 percent expected by analysts surveyed by Thomson Financial. The company said its sales, which were measured against September 2005 figures, paled in comparison because the year-earlier results were bloated by a rush of pre- and post-hurricane shopping.
Wal-Mart had lowered its own sales projection to 1.3 percent from 1.8 percent, saying it had miscalculated its sales figures.
Rival discounter Target Corp. reported a 6.7 percent gain in same-store sales, which are considered the best indicator of a retailer's health. The results beat the 5 percent analyst estimate. Target also raised its third-quarter outlook.
``Our sales in September were well above our expectations, driven in part by favorable weather,'' Bob Ulrich, chairman and CEO of Target, said in a statement.
Department stores, which have shown improvement in recent months, did particularly well in September, helped by strong fashion and cooler temperatures.
Nordstrom reported a 13.4 percent gain in same-store sales, beating the 3.8 percent Wall Street projection.
Penney, which stumbled in August, rebounded in September with a 10.2 percent gain in same-store sales, better than the 5.2 percent estimate. The retailer reported strong sales across all apparel and accessory categories.
Federated, which acquired May Department Stores Co. last year, had a same-store sales gain of 6.2 percent, better than the 5.5 percent estimate. Same-store sales include only Macy's and Bloomingdale's.
In a statement released Thursday, Terry J. Lundgren, Federated's chairman, said customers have responded positively to the conversion of most of the former May Co. stores to the Macy's brand in September.
Federated also raised its third-quarter and annual profit outlook, based on a strong month.
Limited Brands Inc.'s same-store sales jumped 12 percent, much better than the 7.7 percent Wall Street anticipated. And Bebe reported a 15.3 percent same-store gain, topping the 10.7 percent expected by analysts, while the Children's Place's same-store sales gain soared 20 percent, exceeding the 14.6 percent estimate from Wall Street.
But Pier 1 Imports Inc., whose Chairman and CEO Marvin Girouard recently announced he would retire early next year amid a three-year slump, continues to struggle. The retailer posted a 10.1 percent decline in same-store sales in September, worse than the 7.7 percent dip Wall Street expected.
On Wednesday, Hot Topic, Inc. reported a 7.3 percent decline in same-store sales, worse than the 5.6 drop analysts projected, and American Eagle Outfitters Inc. reported a 19 percent gain in same-store sales, better than the 11.3 percent increase. On Tuesday, Kohl's Corp. reported a robust 16.3 percent gain in same-store sales, exceeding the 8 percent estimate.