Warmer Weather Chills October Retail Sales

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Unseasonably warm weather in much of the United States along with still cautious consumers resulted in mixed sales for October, earnings reports released today showed. Although some retailers surpassed expectations, overall sales showed the lowest gains since April.

Retail Metrics, which tracks the monthly figures, said its index of same-store sales rose 1.5% in October, less than the 1.7% that Wall Street analysts had predicted.  However, among 28 retailers that have reported their results, more than half exceeded estimates, Thomson Reuters data showed.

Retailers such as Limited Brands Inc. and Gap Inc. to Ross Stores Inc.  and Macy’s Inc. also lifted their third-quarter forecasts or gave an outlook that exceeded Wall Street estimates after they each reported better-than-expected October sales.

‘A Decent Demand’ Going into Holiday

Results also compared against reduced estimates. Analysts had cut their October estimate to a 1.7% increase from a 2.2% gain at the start of the month, Retail Metrics said.

“I think there is decent demand going into the holidays” said Ken Perkins, president of Retail Metrics. “Consumers have been relatively cautious in purchases all year long, and they have been looking ahead to the holidays.”

The average same-store sales rise of 1.6% across all retailers matched analysts’ estimates and marks the 14th consecutive month of increases for retailers, after a year of declines during the recession.

The International Council of Shopping Centers forecast November sales would rise 3% to 4%. But some retail analysts warned that improving demand at some channels does not imply industry wide strength going into the holiday season.

“We’ve been saying that consumers are buying what they need to buy, not doing a lot of spending on spur-of-the-moment items,” said Russell Jones, a director at consulting firm AlixPartners. “You’re going to need to have a compelling offer, whether it’s discounts or merchandise, to get people to come into stores.”

Among the retailers reporting their October and some third quarter sales were:

Macy’s Inc. lifted its second half profit estimates after reporting increases in its third quarter same store and total sales. The department store retailer posted quarter same-store sales rose 3.9%.Total third-quarter sales rose 6.6% to $5.62 billion. In October, same-store sales rose 2.5%, beating analysts’ estimates for a 1.6% rise. October sales totaled $1.81 billion, up 6.8%.

As a result, Macy’s increases its second half profit forecast to $1.50 to $1.55 a share, up a nickel on the top and bottom ends. Retail analysts had estimated $1.52 for the final two quarters of the fiscal year ending in January. The company expects fourth-quarter same-store sales up 3% to 4%. For the second half, that means same-store sales up 3.3% to 4%, against Macy’s previous estimate of 3% to 3.5%. The company said it had benefited from exclusive brand launches, such as Kenneth Cole Reaction sportswear, and its My Macy’s localized buying strategy.

“While we experienced some softness in sales early in October given the unseasonably warm weather, we ended the month with a strong trend going into the holiday selling season,” Terry Lundgren, ceo, said.

JCPenney Co. reported a 1.9% decrease in its October same-store sales, as unseasonably warm temperatures hurt sales at its best performing regions. In the prior-year period, the decline was 4.5%. Total sales for October were $1.27 billion, down from $1.31 billion in the prior year.

For the third quarter, the store reported comparable store sales increase of 1.9%, compared to a decline of 4.6% last year. Total company sales for the quarter were $4.19 billion, slightly up from $4.18 billion a year ago. For the year-to-date period, JCPenney’s comparable store sales rose 1.5%, compared to a decrease of 7.2% last year. The company also reported a 0.4% increase in total sales for the period to $12.06 billion from last year’s $12 billion. According to the management, sales of non-weather sensitive merchandise, such as fashion jewelry, luggage, housewares and beauty continued their positive sales trend for the month. Overall, shoes and men’s apparel were the top performing divisions. In addition, sales of Liz Claiborne merchandise continue to perform very well, ahead of expectations, attracting new customers to JCPenney, the only department store to carry the iconic brand.

Kohl’s reported total sales the month were 1.0% lower than October 2009. On a comparable store basis, October sales decreased 2.5%t. For the quarter, total sales increased 4.1%and comparable store sales increased 1.8%. Year to date, total sales increased 7.4% and comparable store sales increased 4.4%.

Kevin Mansell, chairman, president and chief executive officer, said, “Strong performance in the second half of the month partially offset lower sales in the first two weeks of the month due to unseasonable weather. The West region reported the strongest results for the month. The footwear business again reported the strongest comparable store sales. Our e-commerce business continues to report strong growth.” The company expects third quarter earnings of $0.57 to $0.58, consistent with the low end of its previous guidance of $0.57 to $0.63.

Dillard’s comparable store sales for the month declined 1%. The company’s October sales were $356.1 million, compared to $361.6 million in last year period. Total sales for the period declined 2%. Sales in comparable stores for the third quarter increased 1%. Total sales for the quarter were $1.3 billion, flat with last year. For the 39 weeks ended October 30, sales in comparable stores increased 1%.Total sales were $4.1 billion, flat with last year.

Neiman Marcus’ same-store sales grew 11.5% to $306 million last month when compared to the $274 million recorded in October 2009. In the first 13 weeks of the retailer’s 2011 fiscal year, which began midsummer, Neiman Marcus posted total sales of $927 million, up 6.7% from 2009 when sales were $869 million. In terms of regional performance, Neiman’s saw steady sales in the Northeast, Southeast and Texas

● Saks Inc.’s October same-store sales increased by 8.1%, ahead of analysts’ estimates of a 2% increase. Total sales rose to $233.9 million from $219.9 million. “October comparable store sales were modestly positively impacted by an event shift from November last year; management estimates that the company would have still posted mid-single digit comparable store sales increases for October and the third quarter of 2010 absent the event shift.”

●Nordstrom Inc.’s revenue at stores open for at least a year increased 3.4% in October, beating Wall Street’s forecast of a 2.7% rise. For the third quarter, revenue at stores open at least a year increased 5.8% over 2009. Nordstrom said that its strongest categories included jewelry, dresses and women’s shoes. It said sales grew the most in the Northwest and Northeast, while California stores remained weak. Preliminary total revenue for October was $662 million, up 9% from last October’s $607 million. So far this year, its comp stores sales increased 8.6% over last year, while preliminary total revenue gained 13.5% to $6.49 billion.

The Bon-Ton Stores announced same-store sales for the month down 4.2%. Total sales for the four weeks decreased 4.4% to $214.2 million, compared with $224. million in October 2009.

●Target said sales rose 1.7%, slightly above analysts’ estimates of a 1.5% increase. Still, the company said sales were near the low end of its expectations, hurt by slow demand in the first half of the month. The company said essentials such as food, grocery and beauty products rose, while apparel sales were down.

● Gap, Inc. reported an increase in comparable store sales for October and provided earningsoutlook for the third quarter above analysts’ expectations.  The company said its comparable store sales for October increased 2%, compared to a 4% increase last year. Analysts’ estimates expected same-store sales to decline 2.5%. Net sales for the month were $1.19 billion, up 4% from $1.14 billion in the same period 2009.

By division, comparable store sales at Gap North America increased 5%, compared to last year’s 6% decline. October comparable store sales at the international division increased 1%, compared to a 4% decline in the year-ago period. Old Navy North America recorded a 2% increase in October comparable store sales, over a 14% increase in the previous year. At Banana Republic North America, however, comparable store sales were up 1% versus 6% decline in 2009.

Gap said its third-quarter comparable store sales were flat for fiscal years 2010 and 2009. Net sales for the third quarter rose 2% to $3.65 billion from $3.59 billion in the year-ago period. Analysts had expected the company to report revenues of $3.56 billion for the quarter. The company noted that merchandise margins for the third quarter are expected to be below last year. Gap also expects earnings for the third quarter in a range of $0.47 to $0.48 per share, up from $0.44 per share in the year-ago period. Analysts’ estimates are for $0.44 per share.

●Abercrombie & Fitch said its October same-store sales rose 2%. Wall Street analysts expected the retailer to report a same-store sales increase of 5.6%. Total sales increased 13% to $226.8 million.

●Limited’s same-store sales rose 9%, compared with Wall Street’s forecast of a 6.1% gain. Total October sales rose 10% to $617.3 million. Its profit outlook for the full quarter was ahead of Wall Street estimates, too. Based on stronger-than-expected results, the company raised its third-quarter earnings forecast. Limited now estimates that for third quarter ended October 30 it earned 15 cents to 17 cents a share, compared with its previous view of 3 cents to 8 cents. Sales for the quarter rose 12% to $1.98 billion from $1.78 billion. Analysts’ estimates were for 11 cents profit on $1.94 billion of sales. Comparable-store sales for the quarter rose 10%. In October, same-store sales rose 9%.

The Cato Corp. said that its October same store sales grew 2%, in line with the analysts’ estimates. Total sales rose 3% to $64 million.

Stage Stores reported same store sales during the latest month surprisingly declined 3.50%, as compared to analysts’ target of a jump of 1.50%. For the third quarter ended October 30, same-store sales slipped 0.3% while total sales rose 2.1% to $332 million.

Stein Mart‘s October same-store sales fell 6.5%. Wall Street analysts expected a drop of 1%. “Sales performance in October was impacted by changes in the promotional calendar compared to the prior year, which accelerated sales into the early months of the quarter as previously reported in the company’s August sales release,” the retailer said. “Weather, which was warmer than normal, also negatively impacted sales for October.”

Ross Stores estimated that fiscal third-quarter earnings would rise 20% to 21%, to $1.01 to $1.02 a share from 84 cents in the year-earlier period. For the quarter ended October 30, sales rose 7.5% to $1.87 billion, with same-store sales up 3%. For October, same-store sales rose 4%, while analysts had looked for a rise of 0.8%. Total sales for the month rose 7.7% to $600 million.

Abercrombie & Fitch’s October same-store sales rose 2%. Wall Street analysts expected the retailer to report a same-store sales increase of 5.6%. Total sales increased 13% to $226.8 million.

Aeropostale ‘s October same-store sales fell 2%, compared to the Wall Street target for an increase of 3.1%. Total sales for the month grew by 5% to $146.1 million. Aeropostale expects third-quarter earnings of 62 cents a share, including a previously disclosed charge of 4 cents a share, compared to the Wall Street target of 66 cents a share.

American Eagle Outfitters’ October sales fell 2% while analysts were expecting a gain. But the company raised its third-quarter guidance on better than expected sales and margins. Analysts expected a rise 1.4% for the month. Total net revenue for the month fell 1% to $188 million. For the third-quarter, revenue at stores open at least a year rose 1% while total net revenue rose 2% to $752 million, ahead of the $750 million analysts expected.

Buckle Inc.’s comparable store net sales increased 2.6% from last year, while net sales increased 6.7% to $71.1 million. For the 13-week period, comparable store net sales edged up 0.5% and net sales rose 5.2% to $243.3 million.

●Hot Topic’s comparable store sales during the month of October fell 8.50%, much higher than the estimated 3.2% of fall. Net sales during the quarter slid 3.40% year on year to $183.2 million.

Wet Seal ‘s same store sales in October slipped 0.7%, compared to a 1.3% drop last year, with a 5.8% growth in Wet Seal and a 4.9% drop in Arden B. Total sales for the month advanced 4.1% to $42.7 million.

For the third quarter, Wet Seal’s comparable store sales slipped 0.1%, in comparison with a 6.2% decline last year. Total sales improved 3.4% to $146.4 million. The company said it expects earnings per share for the third quarter to be at the high end of its initial guidance of $0.01 to $0.03.

● Zumiez’ same-store sales rose 21.5% in October, far exceeding analysts’ estimates of a 7.8% increase.

BJ’s Wholesale Club saw sales rise 3.7%, also topping estimates.

●Costco reported a 6% rise in October same-store sales, while analysts were expecting a 4.6% increase.

● The TJX Companies expects third-quarter earnings at the high end of its range of 89 cents a share to 91 cents a share. Wall Street analysts expect earnings of 89 cents a share. TJX said its October same-store sales were flat, compared to analysts’ forecast for a drop of 0.9%.

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