Retailers ring up `OK' November sales

Revenue increases 3.5%, at low end of forecasts

December 02, 2005|By MARKETWATCH

CHICAGO -- Consumers were bargain shoppers last month, shifting much spending to retailers such as Wal-Mart Stores Inc. and J.C. Penney Co., which offered the deepest discounts and the most aggressive marketing devices.

But last month's sales at a handful of specialty retailers - Abercrombie & Fitch Co. and Guess Inc., for example - proved that fashions can still trump discounted prices to attract buyers.

Same-store sales tracked 3.5 percent higher than last year's results, but on the low end of the International Council of Shopping Centers' expectations. Same-store sales, an industry benchmark, measure receipts from stores open at least a year.

At Thomson Financial, the aggregate same-store sales gain was 3.6 percent, just shy of the 3.9 percent projected.

"It's an OK performance, about what we were expecting," said the shopping council's chief economist, Michael Niemira.

A reasonable showing, however, underscores the tentativeness of the rest of the holiday shopping season, the industry's most important time of the year.

"If you don't get a cushion in November, then you have to be far more worried about what happens this weekend and next," Niemira said.

Worth watching in coming weeks will be the promotional stances that Wal-Mart and rival Target Corp. take to lure customers.

Wal-Mart, the world's largest retailer, turned out a 4.3 percent same-store sales increase, outpacing rival Target's results for the first time in 18 months.

Target's same-store sales last month rose 2.6 percent over sales in November last year. Two weeks ago the discount chain halved its forecast range to 2 percent to 3 percent, from 4 percent to 6 percent.

Same-store sales at Costco Wholesale Stores Inc. increased 6 percent in November. That fell short of the 7.9 percent average estimate reached by analysts reporting to Thomson Financial.

J.C. Penney was a star among a lackluster group of department stores that hope things will improve in the final days leading up to Christmas. Penney's sales were up 3.6 percent, nearly double the 1.9 percent expected by analysts.

Nordstrom Inc. surprised Wall Street with a rare miss. Same-store sales came in at 2.8 percent, below the 4.6 percent estimate of Thomson Financial. At Federated Department Stores Inc., results fell 3.4 percent rather than increasing 0.8 percent as expected.

Kohl's Department Stores Inc. missed the mark too, falling 0.1 percent rather than rising 4.3 percent. Dillard's Inc. also came in weak at a gain of 1 percent instead of the 1.2 percent that was forecast.

Saks Inc. was a bigger disappointment, inching up 0.1 percent rather than the 2.7 percent increase expected.

Federated chief executive Terry J. Lundgren said the "strong" business during the post-Thanksgiving weekend could bode well for December and January shopping.

"We know from the past few years that customers are waiting until later to shop for the type of merchandise we offer," he said. "In spite of the disappointing November, we hope the Thanksgiving weekend trend continues through the remainder of the holiday season."

Revenue rises 23%

Abercrombie & Fitch knocked sales out of the park again with a 23 percent increase in same-store sales, outpacing the 21.4 percent projection. Like last year, Abercrombie & Fitch began selling its holiday assortments in late October, with sales of fleece, knit tops and polo shirts flying off shelves at full prices.

Guess did extremely well, too, turning in a 15.8 percent gain in same-store sales, soundly beating the 9.1 percent expectation as it was able to move a larger percentage of merchandise this year at full prices than it did last year.

"It proves that certain leading fashion retailers are immune to the economy, immune to big-box pressures and immune to promotional selling," noted Richard Hastings, analyst at credit consultants Bernard Sands LLC.

Limited Brands Inc. bypassed projection on the sales strength at all four of its brands. The parent of Limited, Express, Victoria's Secret and Bath & Body Works said same-store sales swelled by 5 percent last month, notably better than the 2 percent forecast.

The biggest surprise came from the Express stores, where same-store sales roared past a 1.1 percent expectation with a 13 percent gain.

Gap Inc. squeaked ahead of expectations. Same-stores sales at the Gap, Banana Republic and Old Navy stores fell 4 percent, better than the minus 5.1 percent projection.

Results disappoint

American Eagle Outfitters Inc. was a huge disappointment, with a 1.7 percent increase, far below the expectation of a 10.2 percent increase. The results prompted the company to pull down its fourth-quarter forecast to a per-share range of 70 cents to 72 cents from 73 cents to 75 cents. That's the second time this quarter that American Eagle has reduced its outlook.

Wet Seal Inc. turned out its 11th straight month of positive same-store sales, eight of which have been double-digit gains of 35 percent or better. For November, the results were 51.5 percent above last year's drop of 19.5 percent, which followed a string of similar declines.

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