U.S. retail sales miss view on weak holiday start
By Brad Dorfman
CHICAGO (Reuters) – U.S. retailers from Macy’s to Costco posted much weaker-than-expected sales for November as shoppers focused only on big bargains at the start of the key holiday selling season.
The Thomson Reuters same-store sales index rose 0.5 percent for the month, falling far short of Wall Street expectations for a 2.1 percent increase. Many retail shares traded lower on Thursday after the reports, led by declines for teen and children’s chains.
Analysts also warned retailers not to expect a big rush in December to rescue the holiday season, dimming hopes for a consumer recovery that could help propel the U.S. economy in early 2010.
“This might be another season where it is a fight for share of wallet versus total increase in spending,” said Chris Donnelly, partner in Accenture’s retail practice. “It’s pretty clear this is not a consumer who is going to be buying a lot of full-priced products.”
A total of 81 percent of the retailers tracked by Thomson Reuters missed estimates, including Costco Wholesale Corp, Children’s Place and Walgreen Co. For a graphic on November sales, click link.reuters.com/ryb84g.
Over the U.S. Thanksgiving weekend that began on November 26, shoppers focused mostly on promotions and made few impulse purchases as concerns about the economy remain top of mind.
“Retailers are in fact driving traffic to their stores through very targeted promotions” that amount to loss leaders, said analyst Brian Sozzi of Wall Street Strategies Inc.
“It looks as if the litany of Black Friday and Cyber Monday surveys did not exactly paint a clear picture of the start to the holiday selling season,” Sozzi said of early hopes for a strong Thanksgiving weekend.
The International Council of Shopping Centers forecast a 2 percent to 3 percent increase in December same-store sales, which would result in an estimated 1 percent rise for the November-December holiday season.
PROTECTING MARGINS
Macy’s shares fell 4.1 percent in morning trading, while Costco declined 2.6 percent. Among teen retailers, Aeropostale dropped 11.1 percent after forecasting quarterly results that could miss analysts’ estimates, while disappointing monthly results from Abercrombie & Fitch sent its shares down 5.1 percent.
Early data on weekend shopping from the U.S. Thanksgiving Day through Sunday showed only a slight increase in retail sales from the comparable 2008 period, when consumers were hammered by a deepening recession and credit crisis.
As of Black Friday on November 27, analysts had forecast a 2.5 percent rise in November sales at stores open one year, according to Thomson Reuters data. But estimates shrank since the weekend, and as of Wednesday, analysts expected a 2.1 percent increase.
Even if sales are flat or rise modestly during the holiday season, analysts said retailers should report improved profits because they have cut inventories and pared back costs to avoid the huge discounts they were forced into last year.
For example, Victoria’s Secret owner Limited Brand Inc forecast a low-to-mid-single-digit decline in December same-store sales, but said it planned to be less promotional this month. Continued…
