UPDATE: Retailers Showing Mixed October Sales Results
05 November 2010 - 12:38AM
Dow Jones News
Retailers are turning in mixed sales for October, as consumers
completed back-to-school buying and took a breather ahead of
holiday buying.
Some standout results reflect the growing popularity of some
retailers' offerings--and promotions--as well as efforts at
one-upmanship.
"There is a market-share war that is heating up as we move into
the holiday season and some retailers evidently are already pulling
out the big guns, creating winners and losers," said John Long,
retail strategist at Kurt Salmon Associates.
Macy's Inc. (M) posted a 2.5% rise in October same-store sales
when a 1.6% gain was projected. The department store raised its
earnings and same-store sales growth guidance for the second half
of the year. "While we experienced some softness in sales early in
October given the unseasonably warm weather, we ended the month
with a strong trend going into the holiday selling season," said
Chief Executive Officer Terry Lundgren.
Macy's may be taking market share from two of its chief rivals.
J.C. Penney Co. (JCP) reported a 1.9% drop in comparable store
sales and Kohl's Corp. (KSS) posted a 2.5% decline, when both
department stores were expected to report gains.
"Strong performance in the second half of the month partially
offset lower sales in the first two weeks of the month due to
unseasonable weather," Kohl's Chief Executive Officer Kevin Mansell
said.
Target Corp. (TGT) posted a same-store sales rise of 1.7%, at
the low end of the company's expectations but beating a 1.5% rise
expected by analysts. The mass merchant in October began giving
customers 5% off when they use its Visa or debit cards and has also
aggressively been remodeling stores, with an emphasis on adding
groceries as a way of bringing shoppers in. Target, however, said
the environment remains uncertain.
Luxury fared well in October with Saks Inc. (SKS) posting an
8.1% jump in same-store sales for the month, sailing past the
moderate 2% rise analysts had expected. The company said the
strongest sellers at its Saks Fifth Avenue stores were women's
shoes, women's apparel, men's sportswear, cosmetics, and
fragrances. Saks said it continues to expect "comparable store
sales growth in the mid-single digit range" in the second half of
the year.
Nordstrom Inc. (JWN) also beat expectations, posting a 3.4%
increase in same-store sales compared with the 2.7% rise analysts
were expecting.
Other winners so far include Limited Brands Inc. (LTD), which
sharply boosted its fiscal third-quarter profit target after
reporting October same-store sales jumped a bigger-than-expected
9%, as the parent of Victoria's Secret and Bath & Body Works
continues its resurgence of late.
Aeropostale Inc. (ARO) appears to be a victim of the pricing
wars among teen retailers, posting a 2% drop in October same-store
sales when analysts expected a 3.1% rise. The company is being
pinched as other chains that sell teen apparel, like Abercrombie
& Fitch Co. (ANF) and American Eagle Outfitters Inc. (AEO) have
been lowering prices, encroaching on Aeropostale's corner of the
market.
Also in the teen sector, Zumiez Inc. (ZUMZ), which has been on a
tear, posted a 22% jump in comparable store sales when a 7.8% rise
was expected. Zumiez lifted its third-quarter earnings projection,
citing better-than-anticipated demand and margins. However, Hot
Topic (HOTT) showed an 8.5% same-store-sales drop when a 3.2%
decline was projected, and said it expects earnings for the quarter
ended Saturday to be at the low end of its August target.
Close-out chain Big Lots Inc. (BIG) saw sales fall off as
back-to-school season wound down. "We began to experience more
volatile and inconsistent sales trends in late September lasting
through October," said Chief Executive Officer Steve Fishman. "Our
customers were very selective." Fishman added that if the price was
right and the need was there, customers did respond, saying they
were "still willing to spend money where they saw tremendous values
as evidenced by the continued strength in certain of our higher
ticket, discretionary categories."
Discount merchandiser Fred's Inc. (FRED) saw same-store sales
rise 1.2%, about half the amount that was expected, but said it
expects third-quarter earnings to be in line with guidance.
The 28 retailers that report same-store sales, or sales at
stores open at least a year, are expected to show a 1.6% growth,
according to analysts polled by Thomson Reuters. Retailers posted
1.8% growth a year ago and, as a group, are now in their second
month of comparing against positive numbers after a year of
same-store sales declines. Wal-Mart Stores Inc. (WMT) does not
report same-store sales.
The results are giving a taste of what retailers may expect for
Christmas, more selective shopping from consumers who are still not
comfortable with the economy. Projections for holiday season sales
vary, ranging from a slight loss to over 4% growth, reflecting even
economists' uncertainty about the season.
Unemployment remains close to 10% and consumer confidence is
still very shy of robust, factors that will play into buying
decisions.
The situation has also caused some retailers to already begin
promoting Christmas. Sears Holdings Corp. (SHLD) is already
advertising "Black Friday" specials. Toys R Us is promoting its
catalogue of holiday toys and gadgets. In a sign of the kind of
approach many retailers may take this holiday season, the Toys R Us
catalogue has an application for smartphones and is
Internet-friendly.
-By Karen Talley, Dow Jones Newswires; 212-416-2196;
karen.talley@dowjones.com
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