U.S. Retailers' Sales Decline 0.6% From Prior Week
By Shobhana Chandra
New York, Dec. 19 (Bloomberg) -- U.S. retailers' same-store sales fell for a third straight week, slipping 0.6 percent and raising concern that stores will miss sales forecasts this holiday season, Bank of Tokyo-Mitsubishi Ltd. and UBS Warburg said.
Bank of Tokyo economist Michael Niemira cut his estimate for November-December same-store sales to a gain of 2 percent to 4 percent, from a 4 percent rise. Winter storms in the Midwest and south-central U.S. damped demand, he said. Shopper traffic at malls fell 9.6 percent in the seven days ended Dec. 16 from a year ago, the National Retail Federation and RCT Systems Inc. said.
Analysts had expected sales to pick up in mid-December as consumers who had postponed buying gifts started their holiday shopping. A sales surge in the final days before Christmas may not be enough to shore up retailers' profits, which likely will be hurt by steep price cuts, analysts and investors said.
``It's too late to save Christmas now,'' said analyst Brian James of Loomis, Sayles & Co., which holds retail shares such as Target Corp. ``I didn't expect it to be this bad. I now expect (fourth-quarter) profit will be below what I'd thought prior to Thanksgiving.''
Shares of Wal-Mart Stores Inc. fell $2.56 to $48, Target fell $2.94 to $28.75 and Federated Department Stores Inc. fell $2.13 to $29. Sears, Roebuck & Co. fell 53 cents to $33.37, and J.C. Penney Co. fell 31 cents to $8.94.
Sales at stores open at least a year fell 0.3 percent in the week ended Dec. 9. from the prior week, when sales fell 2.6 percent. Consumers this year have an extra weekend to complete their shopping compared with last year because Christmas falls on a Monday.
Same-store sales, or sales at stores open at least a year, are a key indicator of a retailer's business because they exclude new and closed stores.
Holiday Sales
Holiday sales gains this year were expected to trail last year, retailers' best performance in seven years, analysts said.
In 1999, retailers' same-store sales rose 4.1 percent in November and 6.7 percent in December, for an average gain of 5.4 percent, Bank of Tokyo said. Sales rose 4 percent this November, in line with estimates, Bank of Tokyo said.
Retailers have been slashing prices to draw shoppers amid concerns that consumer spending may slow because of rising interest rates and energy prices, and declines in the stock market. The discounts so far have failed to give sales the expected boost, and many retailers have said sales this month are below estimates.
``We have to recognize the reality that sales in the first three weeks have been below plan,'' Bank of Tokyo's Niemira said. ``Retailers are hoping this week is strong enough to get them closer to plan, but it's a struggle.''
Sales this week will get a boost as Hanukkah begins on Friday and customers pick up last-minute gifts for Christmas, analysts said. In the last week of December, customers will head to stores to use the gift certificates they got during the holidays.
For some retailers, as much as 45 percent of December's sales may come in the last two weeks, Niemira said. Still, the amount of profit from each sale will be reduced as retailers step up discounts to get rid of holiday items ranging from sweaters and jackets to dinnerware, toys and jewelry, analysts said.
``Retailers will be anxious to clear out inventories, you'll see more price cuts this week,'' said Bill Ford, senior economic adviser at TeleCheck Services Inc. ``It'll be a great time to go shopping.''
Sales rose 2.4 percent in the first 24 days of the season starting Friday after Thanksgiving, less than half of last year's 5.8 percent gain, Ford said. TeleCheck analyzed checks written by consumers at about 27,000 locations. The company's forecast for a 4 percent gain in sales in the 31 days between Thanksgiving and Christmas ``looks increasingly difficult,'' Ford said.
Sales Results
Wal-Mart yesterday said sales in the seven days ended Friday were below its forecast, the third straight week of lower-than- expected results for the world's largest retailer.
Sears, the biggest U.S. department-store company, said it hasn't kept pace with December estimates. J.C. Penney said sales for the month are tracking ``at the low end of forecasts.''
Bank of Tokyo's Niemira cut December same-store sales estimates for Target to a gain of 1.5 percent from 3.5 percent. The forecast for Federated Department Stores, owner of the Macy's and Bloomingdale's chains, was reduced to 2 percent from 3 percent. May Department Stores Co.'s forecast was cut to 1.5 percent from 2 percent.
Niemira also cut estimates by half for Wal-Mart, Sears and Kmart Corp. Wal-Mart's sales now are expected to rise 1.5 percent, and Kmart and Sears will increase 1 percent.
For J.C. Penney, Niemira forecasts a 5 percent decline at its department stores, more than his previous forecast for a 4 percent drop.
Best Regards, J.T. |
