Cautious shoppers slow down October sales

Monday, 07 November 2011
Main American fashion retailers have been anticipating November’s festive season with general increases in their sales for the month of October. However, that average increment of 3.4% has not met analysts’ expectations.

The retailers tracked by Thomson Reuters posted in October an average increase of 3.4 percent in sales at stores open at least a year compared with the same month last year, missing analyst estimates of 4.5 percent. The disappointing growth followed stronger results in August and September, when same-store sales rose 4.4 percent and 5.1 percent, respectively.

Analysts and consulting firms have been putting together holiday-growth projections, and most numbers have been gaining in the 3 percent to 4 percent growth range. Yet other indicators suggest a weaker holiday season ahead. Consumer sentiment continues to be weak, and ports have been reporting that much less holiday inventory coming through their docks than they expected.

A number of retailers were reported to be discounting even more than usual to pump up October sales. “Even retailers who reported significant upside to sales had to give up margin to drive the incremental sales,” Adrienne Tennant, an analyst at Janney Capital Markets, wrote in a note to clients. According to analysts and industry insiders, October is not a critical month for their bottom lines. They typically use it to cut prices on early fall merchandise to make room for holiday stock on the floor.

Saks announced that owned sales totaled $235.7 million for the four weeks ended October 29, 2011 compared to $233.9 million for the four weeks ended October 30, 2010, a 0.8% increase. Comparable store sales increased 1.8% for the month. Meanwhile, mother company Macy’s reported total sales of $1.842 billion for the four weeks ended Oct. 29, 2011, an increase of 2.0 percent compared with total sales of $1.806 billion in the four weeks ended Oct. 30, 2010. On a same-store basis, Macy's, Inc. sales were up 2.2 percent in October. "Our third quarter was within our initial guidance for same-store sales to be up between 4 percent and 4.5 percent. And as previously expected, October showed the smallest year-over-year growth rate of the quarter as we shifted Macy's popular Shop For A Cause event from October last year into August this year," said Terry J. Lundgren, chairman, president and chief executive officer of Macy's, Inc. "Sales of cold-weather products such as coats, hats and sweaters were soft for most of October as the weather stayed unseasonable warm, but they began to normalize once temperatures turned cooler. Ironically, sales were negatively impacted by the snowstorm in Northeast and Mid-Atlantic states last Saturday, the final sales day of the October period. "We remain confident in our expectations for same-store sales in the fourth quarter to be up by 4 percent to 4.5 percent given our unique local assortments, strong omni-channel approach to the customer, enhanced selling skills in our stores organization, and a very creative and compelling marketing program," Lundgren said.

Notable exception was Gap, which net sales for the four-week period ended October 29 were $1.14 billion compared with net sales of $1.19 billion for the four-week period ended October 30, 2010. The company’s comparable sales for October 2011, which include the associated comparable online sales, were down 6 percent compared with a 4 percent increase for October 2010.

Also J. C. Penney released lower comparable store sales for the four-week period ended Oct. 29, 2011, as they decreased 2.6 percent. While sales overall were soft, women's apparel and accessories experienced sales gains in October. Geographically, the southeast was the top performing region. Total Company sales decreased 6.6 percent for the month.