Originally created 12/02/05

Nation's retailers post mixed sales for November



NEW YORK - The outlook for holiday shopping was hazy Thursday after the nation's retailers reported a mixed start to the season that indicated consumers were willing to spend only when they found a bargain.

As merchants released their results Thursday, the winners were those that heavily discounted over the Thanksgiving weekend, including industry leader Wal-Mart Stores Inc. and J.C. Penney Co. Inc. One of the biggest disappointments was upscale Nordstrom Inc., usually a top performer. Teen retailers also had a mixed performance.

An upbeat surprise came from Limited Brands Inc., which announced solid gains in November after struggling for months with its fashions. Limited's sales were fed by a combination of aggressive price cutting and a makeover at its Express division.

"Things are improving, but I still think that consumers are being careful with their shopping," said Madison Riley, a strategist at Kurt Salmon Associates. "The holiday season won't be a disaster. It will be solid, but it won't be a home run."

Michael P. Niemira, chief economist at the International Council of Shopping Centers, described November's sales performance as "uneven," saying they "had an uncomfortable feel."

"You had some very good performances by only a handful of stores, but you also had a fair amount of weakness," said Niemira, noting that some of the industry's star performers - luxury stores, teen retailers and wholesale clubs - saw their sales slow last month.

The UBS-International Council of Shopping Centers' November sales tally of 65 retailers rose 3.5 percent last month; the results matched Niemira's forecast, but beat a meager 1.8 percent increase a year ago. The sales tally is based on sales at stores open at least a year, known as same-store sales.

"The economic numbers look better, but on the other hand you worry about consumers' ability to spend," Niemira said.

The Commerce Department reported separately Thursday that personal spending edged up modestly in October, while incomes rose 0.4 percent. In another report, the Labor Department said the number of hurricane-related job losses totaled just 9,600 last week, a substantial improvement from the 21,000 the previous week. The total number of jobs lost to Katrina, Rita and Wilma is now estimated at 592,000.

Retail analysts were optimistic going into the holiday season because gasoline prices have fallen from their September highs. The latest batch of upbeat economic data and a rebound in consumer confidence in November were encouraging signs that shoppers might be more generous this holiday season.

But merchants face big challenges. While gas prices have fallen, they remain above last year's levels and home heating costs are also expected to be high this winter.

Wal-Mart, which stumbled last holiday season by not discounting enough, benefited by offering more markdowns this year. The world's largest retailer posted a same-store sales increase of 4.3 percent, matching estimates from analysts polled by Thomson Financial.

Wal-Mart's total sales rose 9.4 percent. It expects same-store sales growth for December of 2 percent to 4 percent.

Discount rival Target Corp., whose business may have been hurt by Wal-Mart's aggressiveness, had a 2.6 percent increase in same-store sales, in line with its reduced forecast of 2 percent to 3 percent. The results came slightly under the 2.7 percent Wall Street forecast. Total sales rose 3.2 percent.

Costco Wholesale Corp. reported a 6 percent gain in same-store sales, short of the 7.9 percent estimate. Costco's total sales rose 9 percent.

High-end stores such as Nordstrom and Neiman Marcus Group Inc. reported only modest gains. Nordstrom's same-store sales rose 2.8 percent, well off the 4.6 percent analysts expected. Total sales rose 5.8 percent.

Neiman Marcus had a 4 percent same-store sales increase and a 6.6 percent total sales gain. Thomson Financial does not offer sales estimates since the luxury retailer is now privately held.

Department store operator Saks Inc. posted a slim 0.1 percent same-store sales gain, hurt by sluggish business at its luxury Saks Fifth Avenue stores. The results were well under the 2.7 percent Wall Street forecast. Total sales fell 14.5 percent.

Federated Department Stores Inc., whose acquisition of May Department Stores Co. closed in August, suffered a 3.4 percent same-store sales decline, below the 0.8 percent gain analysts forecast. Total sales rose 89.3 percent, including the May stores.

Its same-store sales include only Macy's and Bloomingdale's locations.

"Although business was strong over the Thanksgiving Day weekend, we were disappointed with our sales earlier in November," said Terry J. Lundgren, Federated's chairman, president and CEO, in a statement.

J.C. Penney had a same-store sales gain of 3.6 percent in its department store group, above the 1.9 percent estimate. Total sales rose 9.3 percent.

Gap Inc. posted a 4 percent decrease in same-store sales, though the results were better than the 5.1 percent drop analysts forecast. Total sales were unchanged from a year ago.

Limited posted a 5 percent gain in same-store sales, better than the 2 percent forecast. The solid increase was helped by a dramatic improvement in business at its Express stores, which registered a 13 percent same-store gain and is attracting more customers with a less expensive casual clothing strategy. Its previous emphasis on pricier wear-to-work clothes failed.

Teen retailers had a mixed performance.

Abercrombie & Fitch Co. had a 23 percent gain in same-store sales for the month, better than the 21.4 percent estimate. Total sales rose 34 percent. The teen retailer, which has refrained from discounting, proved that if the merchandise is compelling, teens will buy.

American Eagle Outfitters Inc., which reported its results late Wednesday, had a disappointing 1.7 percent increase, well below the 10.2 percent Street estimate. Total sales rose 6.9 percent.