The outlook for the holiday shopping season brightened Thursday as many of the nation's retailers reported that their sales improved last...
NEW YORK — The outlook for the holiday shopping season brightened Thursday as many of the nation’s retailers reported that their sales improved last month with the arrival of colder weather and the easing of gasoline prices.
A variety of retailers including Costco Wholesale Nordstrom, Wal-Mart and J.C. Penney beat Wall Street expectations. Apparel retailers Gap and Limited Brands again struggled with their fashion formulas and reported disappointing sales, but analysts were nonetheless more upbeat about the holidays for the industry overall.
“Consumers are hanging in there, despite facing significant pressure on their discretionary income” from still-high energy prices, said Ken Perkins, president of Retail Metrics, a research firm in Swampscott, Mass. “The glass is more full heading into the holiday season. The consumer doesn’t seem to be tapped out.”
The UBS-International Council of Shopping Centers’ October sales tally of 69 retailers rose a better-than-expected 4.4 percent, above the year-to-date average of 3.9 percent. The tally is based on same-store sales, those from stores open at least a year.
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The results were surprising given retailers’ struggles throughout last month, including the effects of Hurricane Wilma, the lingering fallout from Hurricanes Katrina and Rita, as well as some unseasonably warm weather that slowed sales of sweaters and coats.
“The October showing doesn’t mean that the worry level has been reduced tremendously,” said Michael Niemira, chief economist at The International Council of Shopping Centers. “It means that the retailers have a bit more confidence that their strategy to discount more will give them a better season.”
Niemira said he is not changing his same-store sales forecast of a 3 to 3.5 percent gain for the November-December period, but he feels more confident that merchants may be able to meet the high end of the range.
This holiday season, the nation’s stores plan to lure shoppers with velvet clothing and romantic blouses. They also are hoping that home-entertainment products like flat-screen TVs will do well as consumers are expected to spend more time at home to conserve gasoline.
But, unlike last year’s holiday season, dominated by iPods and other digital-music players, there is “no clear direction,” according to Marshal Cohen, senior industry analyst at NPD Group, a market-research company in Port Washington, N.Y. “This year, the novelty [of consumer electronics] has worn off,” he added.
Costco had a 10 percent increase in same-store sales for the month, helped by the rise in gasoline prices as many of its stores have gas pumps. Excluding the effects of gas-price inflation, same-store sales would have been up 8 percent. Analysts expected a 7.9 percent increase.
Wal-Mart forecast a 3 to 5 percent same-store sales increase for November when it announced a robust 4.3 percent gain in same-store sales for October. The figure beat the consensus from Thomson Financial, which estimated a 3.8 percent gain.
Target had a 5.7 percent gain in same-store sales in October, beating analysts’ 4.7 percent estimate.
Nordstrom had a 6.4 percent gain in same-store sales, versus the 3.9 percent estimate. J.C. Penney reported a 2.4 percent gain in same-store sales in its department store business, better than the 1.6 percent estimate.
Federated Department Stores, whose acquisition of May Department Stores closed in August, posted a 0.7 percent decline in same-store sales for the month, below the 0.9 percent gain Wall Street expected. Same-store sales include only Macy’s and Bloomingdale’s locations open for more than one full fiscal year.
Terry Lundgren, Federated’s chairman, president and CEO, said that the company expects same-store sales to increase by a modest 1 to 2 percent over last year.
Limited had a 4 percent drop in same-store sales, worse than the 3.3 percent analysts expected.
Starbucks, the largest U.S. coffee-shop chain, said October sales at stores open more than a year rose 7 percent. Same-store sales jumped 11 percent last October.
Starbucks beat the same-store sales rise of 4 percent projected for October by UBS Securities.
Information about Starbucks provided by Bloomberg News