Retailers to Report Lackluster Nov. Sales
Thursday December 6 12:04 AM ET
By Jackie Sindrich
NEW YORK (Reuters) - U.S. retailers are expected to report another month of dull sales on Thursday, as spring-like temperatures dashed hopes for recovery in November and deep discounting failed to lure more customers, analysts said.
Discounters such as Wal-Mart Stores Inc. (NYSE:WMT - news) and Target Corp. (NYSE:TGT - news) are again expected to buck the wider recessionary trend, as shoppers focus on ``the necessities,'' while the wounds of department stores and specialty apparel retailers deepen.
Most major retailers will report same-store sales -- or sales at stores open at least a year -- on Thursday.
``Consumers basically still haven't gone to the cash register in full-force in order to drive sales higher,'' Bear Stearns analyst Dana Telsey told a conference call on Monday. ''And they're willing to wait: Markdowns are big and getting bigger,'' she said.
Federated Department Stores Inc.'s (NYSE:FD - news) Macy's, AnnTaylor Stores Corp. (NYSE:ANN - news) and battered No. 1 apparel chain Gap Inc. (NYSE:GPS - news), owner of the Gap, Old Navy and Banana Republic stores, have already slashed prices up to 70 percent.
``They're giving the store away,'' said Lauri Brunner, an analyst for RBC Capital Markets in Minneapolis. ``I think some people thought the increased promotions would drive some of the traffic, so that buying would happen earlier in the season,'' she said. ``I don't think that's going to be the case.''
Analysts said consumers are putting off holiday shopping until later each year, with the bulk of sales now being done in the week before Christmas.
Unusually warm weather through much of the United States, including the densely populated Northeast, has also added insult to injury for retailers, already suffering from the Sept. 11 fallout. Stores count on steady cold temperatures to boost sales of big-ticket outerwear and sweaters.
``Apparel as a category should be a major disappointment across the board, owing to unseasonably warm weather,'' Bernstein analyst Emme Kozloff said in a note.
DISCOUNTERS RULE
U.S. consumer confidence (news - web sites) fell for a fifth straight month in November -- now at its lowest level in seven years -- as Americans fretted over layoffs and job security.
Discount chains, buoyed by low-priced items for the home, are expected to report same-store sales rose in the 3 percent to 6 percent range, while department stores sales are set to decline about 5 percent to 10 percent, analysts said.
Of the few expected to impress is value-priced department store chain Kohl's Corp. (NYSE:KSS - news), a consistently strong performer, with same-store sales expected to jump 20 percent to 23 percent. The estimate is inflated by an extra week in the company's reporting period.
Wal-Mart, the world's largest retailer, is set to report a 4 percent to 6 percent rise in same-store sales, boosted by housewares, fabric, electronics and food. Rival Target is expected to report a gain in the range of 10 percent to the low-teens as it benefits from a calendar shift.
Kmart Corp. (NYSE:KM - news), which has been losing market share to Wal-Mart, is projected to have flat to a 2 percent rise in same-store sales.
Consumer electronics retailers, such as Best Buy Co. Inc.(NYSE:BBY - news), are also expected to fare better than most, helped by strong demand for DVDs and the launch of video game consoles XBox (news - web sites) by Microsoft Corp. (Nasdaq:MSFT - news) and Nintendo (news - web sites) Co. Ltd.'s (7974.OS) GameCube.
MORE BLEAKNESS FOR DEPARTMENT STORES
Teen-oriented clothing retailer Abercrombie & Fitch (NYSE:ANF - news), which has struggled against fading sales and held more promotions than normal in November, is expected to decline 16 percent to 18 percent, versus an 8 percent decline last year.
Specialty retailers Intimate Brands Inc. (NYSE:IBI - news), Limited Inc. (NYSE:LTD - news) and Talbots Inc. (NYSE:TLB - news) are all expected to post same-store sales declines worse than a year ago.
The outlook for Gap is even bleaker, with same-store sales set to tumble 18 percent to 20 percent, analysts said, compared with a 1 percent dip last year and a 17 percent drop in October. The retailer has been mired in fashion missteps, diminishing sales and a weakening economy.
No. 4 U.S. retailer Sears, Roebuck and Co. (NYSE:S - news) said recently it expects same-store sales during the holiday shopping season to fall 3 percent to 4 percent, below its previous flat forecast, while May Department Stores Co. (NYSE:MAY - news) is also set to post below-plan sales.
Federated, parent of Macy's and Bloomingdale's, is expected to report same-store sales down 2 percent to up 1 percent, in line with its target, hurt by slow sales of discretionary items and its large presence Manhattan and California.
Warehouse club operator Costco Wholesale Corp. (Nasdaq:COST - news) is expected to post a 4 percent to 6 percent same-store sales rise, on solid food sales and electronics.
[Harry: Further indication that the market is running on smoke. I saw a news story today that the saving rate in the USA is 0.2 percent and in Canada it is 3.3 percent. That was perceeded by a story of people buying big ticket items like cars and condos due to the low interest rates. What happens when the Fed stops easing, which is likely the meeting? ] |
