Home Focus Drives Furnishings, Crafts Up
By REUTERS
Filed at 5:06 p.m. ET
CHICAGO (Reuters) - U.S. retailers that sell home furnishings and crafts, like Michaels Stores (news/quote), reported strong sales in October against a weak economic backdrop as consumers, shaken by the Sept. 11 attacks, focus on life at home.
``I think people are staying at home more and more,'' Brian Postol, retail analyst with A.G. Edwards, said. ``Instead of thinking about a ski trip, people are staying home and spending money on fixing up their homes.''
``This is really benefiting the home furnishings sector,'' he said.
Shares of companies like crafts retailer Michaels Stores Inc. (MIKE.O) and Pier 1 Imports Inc. (news/quote) (PIR.N), rallied on the data, with shares of Michaels hitting the highest level in at least 10 years.
Most major retailers reported October sales data on Thursday. Industry chain store sales rose 2.3 percent from the same month a year ago, according to an index of more than 80 retailers compiled by Bank of Tokyo/Mitsubishi.
Pier 1, which sells furniture, housewares and decorative items, reported sales at its stores open at least a year -- or same-store sales -- rose 4 percent in October. The monthly sales growth also prompted Pier 1 to raise its third-quarter earnings forecast to 19 to 21 cents a share, up from its previous forecast of 17 to 19 cents a share.
That news cheered investors, who pushed shares of Fort Worth, Texas-based Pier 1 up $1.41, or 11.67 percent, to $13.49 in early afternoon trade on the New York Stock Exchange. Since Sept. 11, the stock has climbed about 33 percent.
BRINGING PEOPLE TOGETHER
Families were pulled closer by the Sept. 11 attacks and are now spending more time working on crafts projects together, Kurt Barnard, president of Barnard's Retail Consulting Group, said.
``This whole thing is bringing people together,'' Barnard said. ``They are working on more family projects.''
Arts and crafts retailer Michaels, based in Irving, Texas, also raised its third-quarter earnings forecast, by 2 cents a share to 53 cents a share, after reporting a very healthy 9 percent increase in October same-store sales. Total sales climbed 21 percent from a year ago to $220.4 million.
``We do believe that the events of last month and the red, white and blue demand probably drew some additional customers who might not have been in our stores in a while,'' Bryan DeCordova, chief financial officer for Michaels, told investors on a conference call.
After the attacks on the World Trade Center and the Pentagon, consumers flocked to craft stores in search of red, white and blue ribbon and fabrics, to make patriotic lapel pins, flags and bunting.
Shares of Michaels rose $2.57 to $55.35 in early afternoon trade on Nasdaq. The stock is up about 32 percent since Sept. 11.
Another crafts retailer, Hudson, Ohio-based Jo-Ann Stores Inc. (news/quote) (JASa.N) said its same-store sales rose a healthy 8.4 percent in October.
Williams-Sonoma Inc. (news/quote) (WSM.N), which sells items for the kitchen and gourmet foods, also rose sharply, pulled higher by optimism about big Thanksgiving holiday gatherings and momentum from other home goods retailers' shares, analysts said. The U.S. Thanksgiving holiday is Nov. 22.
Shares of San Francisco, California-based Williams Sonoma rose $1.40, or 4.5 percent, to $32.50 in afternoon trade on the New York Stock Exchange.
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