UPDATE: Retailers' Sept. Sales Strong, Raising Holiday Hopes
08 October 2010 - 12:58AM
Dow Jones News
Back-to-school buying finally arrived, aided by plenty of
promotions, with most retailers' posting September sales that were
ahead of expectations and raising hopes for the holidays.
Teen retailers, most vulnerable to the fall season, were being
joined by department stores and general apparel retailers in
producing strong numbers, suggesting that some pent up buying
demand was released.
But the sales that retailers wrung up in September came at a
cost, with the extremely promotional environment appearing to have
sparked extra buying. "Consumers remained highly value-centric and
purchased largely only with coupon in hand or because of special
offers," said Thomas Filandro, retail analyst at Susquehanna
Financial Group.
Several retailers, including BJ's Wholesale Club Inc. (BJ), TJX
Cos. (TJX) and Wet Seal Inc. (WTSLA) noted that sales fell off
after strength earlier in the month. The slowdown could cause a
pause in October before the resumption of buying for the holiday
season. Various projections put sales gains for the November to
December period between 2% to 3.5%.
Retailers themselves continue to remain cautious. J.C. Penney
Co. (JCP), while posting a 5.1% rise in sales at stores open at
least a year, when a 3.1% gain was expected, cited "the
continuation of a highly competitive promotional environment and
ongoing volatility with regard to consumer discretionary
spending."
Among other department stores, Macy's Inc. (M), Nordstrom Inc.
(JWN) and Saks Inc. (SKS) all exceeded analysts' expectations,
while Kohl's Corp. (KSS), which has been a perrennial front runner,
came up just a bit short.
Mass merchant Target Corp. (TGT) missed projections, posting a
1.3% rise, when a 1.9% gain was expected, although the company said
it expects initiatives like 5% rebates on credit card purchases to
increase its market share during the upcoming holiday season.
Teen retailers, the most vulnerable group to the back to school
buying, turned in consistently better-than-expected numbers,
reflecting the later start to the season and the kinds of
promotions they were presenting. Some of the stores were offering
discounts on top of already marked down merchandise towards the end
of the month.
Zumiez Inc. (ZUMZ) and American Eagle Outfitters Inc. (AEO)
raised their-quarter earnings guidance after turning in strong
numbers. Among others in the group, Aeropostale Inc. (ARO) posted a
3% rise in sales when a 2.4% decline was expected, Hot Topic (HOTT)
posted a 2.6% drop, when a 3.5% decline was projected; and Wet
Seal's sales declined 0.7% when analysts were expecting a 2.3%
drop.
Limited Brands Inc. (LTD), which counts adults and teens among
its shoppers, smashed through estimates, posting a 12% rise in
sales when 4.1% was expected. The company's Victoria's Secret unit
led the upsurge, posting 13% growth, followed closely by Bath &
Body Works at 11%.
The 28 retailers tracked by Thomson Reuters ended up showing a
2.8% rise for September at stores open more than a year, beating
expectations for a 2.1% gain. Wal-Mart Stores Inc. (WMT) is not
included in the group.
Retailers as a group were up against the first positive
comparable store sales number in a year, when September 2009 showed
a 0.6% advance.
While the year-ago gain was small, there is still significance
in beating a positive number because it can supply a psychological
boost amid what is still a lot of downbeat sentiment, said Mike
Berry, director of industry research for the SpendingPulse unit of
MasterCard Inc. (MA). "Anything that can perhaps be viewed as
positive news can perhaps make a difference."
Still, "We're seeing a continuation of consumers buying close to
their needs, in this case back to school," Berry said.
J.C. Penney Chief Executive Myron Ullman had said earlier in the
month that the company exceeded internal expectations for
back-to-school sales.
And, "Obviously, back-to-school is equivalent to holiday for the
'young businesses,' young men's, juniors and the kids businesses,"
Ullman said.
-By Karen Talley, Dow Jones Newswires; 212-416-2196;
karen.talley@dowjones.com
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