It looks like Cyber Monday wasn't all hype, but Black Friday wasn't strong enough to lift retailers into a successful November. The monthly retail figures are out, and of 30 major national retailers followed by Thomson Reuters (TRIN), only five beat their expected sales targets for the month. Most retailers reported strong online sales that only partly offset wholesale bargain hunting at stores.
"Shoppers continue to give signs that they are ready to loosen the grip on their spending plans, but at the same time remain very cautious and deal-focused in their spending," said Frank Badillo, senior economist at consulting firm Retail Forward, in a report.
According to Thomson Reuters' tally, overall sales were up only 0.5%, far short of the 2.1% growth it had projected for the month -- and that's compared to last year's numbers, when sales saw a drop of 7.8%. The International Council of Shopping Centers' numbers were even grimmer: It tallied a 0.3% drop in comparable sales among the 32 store chains it follows. Retailers are hoping shoppers are procrastinating in their purchasing, as usual. Several have moved their big holiday promotional events from late November to December to take advantage of an extra holiday shopping day, courtesy of the timing of Christmas on Friday this year.
With the holidays coming, apparel sales are making a comeback, as we had reported before. But shoppers are being very careful about where they spent their money. Most of the specialty apparel stores are still struggling, but the ones with a reputation for offering bargains did better than the norm.
While Abercrombie and Fitch's (ANF) comparable sales were down 17% -- with double-digit drops across the board at Abercrombie & Fitch, Abercrombie and Hollister stores -- rival Aeropostale (ARO), which has marked down prices, was up 7%. At Gap Inc. (GPS), which had flat comparable sales, both the Gap and Banana Republic stores were down 4%, while the bargain-priced Old Navy was up 6%.
Limited Brands (LTD) started to deliver on management's vow to get its "mojo" back this season; comparable sales at Victoria's Secret were up 3%, while Bath & Body Works was up 4% -- better than the negatives the company had expected. But those numbers paled next to discounter TJX Cos. (TJX), which was up 8% on a same-store basis, thanks to a 9% increase at the division which includes the Marshall's and T.J. Maxx chains, and an 18% gain at its Homegoods stores.
No Bounce for Department Stores
Meanwhile, reports of a department-store comeback this holiday -- allegedly fueled by shoppers looking for better quality for their limited gift budgets -- may have been premature. The department stores seemed to be treading water during November; sales for that segment were down 4.7%, according to Thompson Reuters.
Macy's (M) same-store sales were down 6.1%. The company attributed the decline to a disappointing Thanksgiving weekend, warm November weather that hurt sales of coats and sweaters, and the shift of its Friends and Family sale to December that may have led some customers to postpone their shopping. The parent of Macy's and Bloomingdale's department stores held to its estimate that fourth quarter sales will be down only 1% to 2%, thanks to the extra shopping day before Christmas. Rival Nordstrom (JWN) posted a 2.2% increase in same-store sales, but that was mainly due to strong results online at its off-price Rack stores, where sales were up 22.9% and 3.3%, respectively; comparable sales at Nordstrom's full-line stores were down 0.6%.
Saks Inc. (SKS) did worse: The luxury department store had a drop of 26.1% in comparable store sales during the month. Saks also shifted a major promotion, its annual designer clearance, from November to December this year, which management said contributed to the weak sales.
It wasn't just the upscale department stores that were below par. J.C. Penney Co. (JCP) reported same-store sales were down 5.9%; strong sales on Thanksgiving weekend and strong online sales were not enough to offset weak sales in the early part of the month. Rival Kohl's Corp. (KSS) performed slightly better, with comparable sales up 3.3%, but that required a 10% increase in transactions per store, which indicates that shoppers are still having trouble parting with their money at checkout.
A Mixed Bag for Discounters
Among discounters, Target Corp. (TGT) reported comparable sales down 1.5%, which management blamed on a weak start to the month, only partly offset by a stronger than expected Thanksgiving weekend, both in stores and online. Like Kohl's, Target's results were affected by shoppers cutting spending: It saw a 1% increase in transactions offset by a 2.5% drop in transaction size. Rival Wal-Mart Stores (WMT) doesn't report monthly sales results.
But the price of gasoline appears to have stopped punishing the warehouse clubs, for the first time in a year. Both Costco Wholesale Corp. (COST) and BJ's Wholesale Club (BJ) reported that higher year-over-year gas prices had ended gas sales' yearlong drag on their sales totals.
BJ's posted a 1% increase in comparable store sales, with no effect from gas prices, while Costco posted a 6% gain, but its sales would have been up only 2% if gas sales had been factored out. Costco's management estimated gas prices that are 29% above the same time last year inflated comparable sales by 1.75 percentage points overall and 2 percentage points in the U.S.
But while gas inflation helped, food deflation took some of the air out of the improved results. Both club chains reported store traffic has increased around 3%, but that is being offset by price drops in many food categories and a few big-ticket electronics such as TVs. BJ's reported that its average transaction size had dropped 2%, mainly due to the price deflation.
So the holiday season is off to a lame start. But several researchers have noted that polls taken after Black Friday showed shoppers had a smaller chunk of their holiday shopping done than they did at the same time last year, when the fire-sale price cutting started earlier. So consumers are just behaving as expected -- waiting until the last minute and holding out for sales. Nothing new about that.
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