Weak October sales scare retailers fixing for holidays
NEW YORK - The outlook for the holiday shopping season grew bleaker Thursday after retailers announced disappointing October sales results due to consumers’ ongoing worries about housing and higher energy prices.
The downbeat news came from all sectors. Even upscale Nordstrom posted a rare sales decline, while Wal-Mart, the world’s largest retailer, saw sales below expectations despite its aggressive discounting heading into the holidays.
Warehouse-club operators including Costco Wholesale and BJ’s Wholesale Club were among the few standouts.
“Overall, the sales trend continues to slow,” said Ken Perkins, president of RetailMetrics, a research company in Swampscott, Mass. “I think the consumer is certainly feeling the [economic] pressure heading into the holidays.”
Mild weather also hurt sales, wiping out consumers’ appetite for winter wear.
The International Council of Shopping Centers-UBS tally was up 1.6 percent in October, below the original 2.5 percent forecast, marking the slowest October pace since 1995.
The tally is based on same-store sales, or sales at stores open at least a year, considered a key indicator of a retailer’s health.
The 1.6 percent pace was below the 2.2 percent gain averaged so far this fiscal year, which for retailers begins in February.
Still, Michael Niemira, the council’s chief economist, estimated that mild weather depressed sales results by about 0.75 percentage point.
With Dec. 25 about seven weeks away, the industry is struggling with consumers’ eroding confidence and a weakening sales trend amid mounting problems in the economy.
One big problem is there seems to be little buzz about must-have items.
In the toy business, retailers and manufacturers already bruised by highly publicized recalls suffered another blow Wednesday, when millions of units of a toy called Aqua Dots were taken off shelves.
Scientists found they contain a chemical that converts into a powerful “date rape” drug when ingested.
Wal-Mart posted a 0.4 percent gain in same-store sales, below the 1.1 percent gain expected by analysts polled by Thomson Financial. The results excluded fuel sales.
Rival Target, which stumbled in September with disappointing results, fared well in October, posting a 4.1 percent gain in same-store sales, above the 2.5 percent forecast.
Issaquah-based Costco had a 9 percent gain in same-store sales, well exceeding the 5.7 percent estimate. Still, results at the company, which sells gasoline at its warehouse stores, were inflated from a year ago by an October uptick in gas prices. Excluding gas-price inflation, sales would have been up 5 percent.
Among department stores, Seattle-based Nordstrom, which reported a weaker-than-expected 3.2 percent same-store sales gain in September, posted a 2.4 percent drop in October. Analysts expected a 1 percent gain.
Saks, which operates Saks Fifth Avenue, posted a 10.6 percent gain in same-store sales, well exceeding the 5.4 percent estimate.
Macy’s posted a 1.5 percent decline in same-store sales, worse than the 0.6 percent projection.
J.C. Penney had a 1.8 percent decline in same-store sales at its department stores; analysts expected a 0.6 percent increase.
On Wednesday, action-sportswear chain Zumiez reported same-store sales rose 5.1 percent, down from last year’s same-period gain of nearly 16 percent. The Everett company also lowered its earnings forecast for the latest quarter.
Its stock closed down $10.71, or 27.1 percent, to $28.74 Thursday.