Retailers report mixed bag
Weather kept wrap on October results, analysts say
Steve Painter and Toby Manthey / Arkansas Democrat-Gazette
The nation’s retailers reported Thursday mixed sales results for October, with many citing warm weather in the first half of the month as the reason shoppers delayed purchases of cool weather clothing.
Sales at stores open at least a year rose an average of 1.6 percent at the 32 chains tracked by the International Council of Shopping Centers, a trade group. Michael Niemira, chief economist for the group, estimated that the warm weather depressed sales by about 1 percent.
The organization forecasts a 3 percent to 4 percent increase in same-store sales for November. Same-store sales, also known as comparablestore sales, are a key performance measure in retailing because they exclude the impact of stores opened or closed in the past year.
“We had unusually warm weather, and that definitely hurt October sales,” said Jharonne Martis, retail analyst with Thomson Reuters. In October, retailers typically are trying to sell off their fall merchandise, she said.
“It’s not a good indicator of what the holiday season will be like,” Martis said.
Looking ahead, she said, “promotional activity is going to be necessary to lure shoppers into the store. Also, newness.”
Little Rock-based Dillard’s Inc. on Thursday said sales fell 1 percent at stores open at least a year for the October period, compared with a year earlier. The drop was consis- tent with analyst forecasts, Thomson Reuters said.
Competitors Macy’s reported sales that rose 2.5 percent compared with the year-earlier period, and sales at Nordstrom climbed 3.4 percent.
Total sales at Dillard’s in October dropped 2 percent, to $356.1 million from $361.7 million a year earlier.
The company said sales of junior’s and children’s clothing were significantly above its average results, but home and furniture sales were significantly below. Sales in the eastern part of the country were above the company’s average performance, while sales in the central and western parts of the nation were slightly below.
Shares of Dillard’s closed at $27.52 on the New York Stock Exchange, up $1.48, or 5.68 percent. The stock has traded between $12.57 and $31.22 in the past year.
Wal-Mart Stores Inc. of Bentonville reports sales with its quarterly earnings statements. Its third-quarter report is to be released Nov. 16.
Rival discounter Target Corp. of Minneapolis reported that same-store sales rose 1.7 percent in October after a 0.1 percent decline a year ago. Sales of nondiscretionary items continued to outpace other categories, Gregg Steinhafel, chairman, president and chief executive officer, said in a news release.
Brian Sozzi, analyst with Wall Street Strategies Inc. in New York, said in a research note that shoppers have “an entrenched buy-now, wearnow mind-set on discretionary purchases.”
“Within that, the buy-now, wear-now product better be the snazziest looking in the mall or offered at 30 percent off, or the retailer runs the risk of losing a ticket,” Sozzi wrote.
At the high end of Thursday’s reports, sports apparel retailer Zumiez Inc. reported same-store sales up 21.5 percent after a decline of 8.9 percent a year ago. The company raised its third-quarter earnings guidance to 36 cents to 37 cents a share from 28 cents to 30 cents.
Zumiez, which operates 400 stores, said sales were strong in all departments and all regions of the country.
Mitch Kummetz, analyst with Robert W. Baird & Co. Inc. of Milwaukee, said in a research note that Zumiez is well-positioned for growth compared with competitors.
“We also believe that Zumiez is one of the better operators in teen retail, based on the training of its sales associates and micromerchandising of its stores,” he wrote.
Limited Brands Inc., which includes Bath and Body Works, Victoria’s Secret and White Barn Candle Co. among its brands, reported same-store sales up 9 percent after suffering a 4 percent decline a year ago.
For the quarter ending Oct. 30, same-store sales were up 10 percent. The company raised its earnings guidance to 15 cents to 17 cents per share, up from previous guidance of 3 cents to 8 cents.
Nieman Marcus Inc. of Dallas reported same-store sales up 11.5 percent for the month and 6.4 percent for the quarter.
At the other end of the sales spectrum, Hot Topic Inc. of City of Industry, Calif., recorded October samestore sales down 8.5 percent, greater than the 2.6 percent decline of a year ago. The retailer sells apparel, accessories, music and other items that are influenced by pop culture.
Jeff Green, a Phoenix-based retail consultant, said Thursday’s reports offered little reason to be optimistic about Christmas sales. He expects sales gains of less than 2 percent.
“There’s really no indication that this Christmas is going to be anything but marginally better than last year,” he said.
His advice to shoppers: Buy early because retailers are keeping inventories low, even as they promote early Christmas shopping. He said shoppers have come to expect better deals as retailers compete for their business.
“They’re obviously watching their pennies, and really I don’t see that changing until unemployment subsides some, which certainly doesn’t appear to be anytime soon,” he said.
Analyst Adrianne Shapira with Goldman Sachs & Co. in New York, said in a research note that early October’s slowdown in sales, compared with September’s pace, was mostly weather-related.
“Retailers universally cited improving sales in the second half of the month, which suggests underlying sales trends remain intact heading into the holiday,” she wrote.