Retailers Showing Mixed October Sales Results In Early Going
November 04 2010 - 7:54AM
Dow Jones News
Retailers are turning in mixed sales for October, as consumers
completed back-to-school buying and took a breather ahead of
holiday buying.
In the early numbers, some standout results reflect the growing
popularity of some retailers' offerings--and promotions--as well as
efforts at one-upmanship.
"There is a market-share war that is heating up as we move into
the holiday season and some retailers evidently are already pulling
out the big guns, creating winners and losers," said John Long,
retail strategist at Kurt Salmon Associates.
Target Corp. (TGT) posted a same-store sales rise of 1.7%, at
the low end of the company's expectations but beating a 1.5% rise
expected by analysts. The mass merchant in October began giving
customers 5% off when they use its Visa or debit cards and has also
aggressively been remodeling stores, with an emphasis on adding
groceries as a way of bringing shoppers in. Target, however, said
the environment remains uncertain.
Other winners so far include Limited Brands Inc. (LTD), which
sharply boosted its fiscal third-quarter profit target after
reporting October same-store sales jumped a bigger-than-expected
9%, as the parent of Victoria's Secret and Bath & Body Works
continues its resurgence of late.
Two teen retailers diverged, with Zumiez Inc. (ZUMZ), which has
been on a tear, posting a 22% jump in comparable store sales when a
7.8% rise was expected. Zumiez lifted its third-quarter earnings
projection, citing better-than-anticipated demand and margins. Hot
Topic (HOTT) showed an 8.5% same-store-sales drop when a 3.2%
decline was projected, and said it expects earnings for the quarter
ended Saturday to be at the low end of its August target.
Close-out chain Big Lots Inc. (BIG) saw sales fall off as
back-to-school season wound down. "We began to experience more
volatile and inconsistent sales trends in late September lasting
through October," said Chief Executive Steve Fishman. "Our
customers were very selective." Fishman added that if the price was
right and the need was there, customers did respond, saying they
were "still willing to spend money where they saw tremendous values
as evidenced by the continued strength in certain of our higher
ticket, discretionary categories."
Discounter merchandiser Fred's Inc. (FRED) saw same-store sales
rise 1.2%, about half the amount that was expected, but said it
expects third-quarter earnings to be in line with guidance.
The 28 retailers that report same-store sales, or sales at
stores open at least a year, are expected to show a 1.6% growth,
according to analysts polled by Thomson Reuters. Retailers posted
1.8% growth a year ago and, as a group, are now in their second
month of comparing against positive numbers after a year of
same-store sales declines. Wal-Mart Stores Inc. (WMT) does not
report same-store sales.
The results are giving a taste of what retailers may expect for
Christmas, more selective shopping from consumers who are still not
comfortable with the economy. Projections for holiday season sales
vary, ranging from a slight loss to over 4% growth, reflecting even
economists' uncertainty about the season.
Unemployment remains close to 10% and consumer confidence is
still very shy of robust, factors that will play into buying
decisions.
The situation has also caused some retailers to already begin
promoting Christmas. Sears Holdings Corp. (SHLD) is already
advertising "Black Friday" specials. Toys R Us is promoting its
catalogue of holiday toys and gadgets. In a sign of the kind of
approach many retailers may take this holiday season, the Toys R Us
catalogue has an application for smartphones and is
Internet-friendly.
-By Karen Talley, Dow Jones Newswires; 212-416-2196;
karen.talley@dowjones.com
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