Weak US sales at leading retailers drag November results down
WEAK sales at leading US retailers in early November dragged down their results for the month as the effects of major Northeast storms offset brisk activity over the long Thanksgiving weekend.
Retailers on average reported a 1.6pc increase in sales at stores open at least a year, about half the 3.3pc rise that analysts had forecast and below a year-earlier gain of 3.5pc, according to Thomson Reuters I/B/E/S.
Target Corp and Macy's Inc, two of the biggest companies to report monthly sales on Thursday, missed analysts' expectations. Both saw weakness at the beginning of November, when superstorm Sandy and another storm hit the Northeast.
"We would probably have seen just blockbuster numbers had it not been for Sandy and the nor'easter, the back-to-back storms in the Northeast," said Alison Paul, U.S. retail and distribution leader and vice chairman for advisory and consulting firm Deloitte.
The two storms and resulting massive power outages and damage "really wiped out a week or two of any retail activity in the most populated part of the country," she said.
In addition, increased online shopping and layaway sales hurt November results, said International Council of Shopping Centers Chief Economist Michael Niemira.
Retailers do not book layaway sales until they are fully paid for and do not book online sales until the products are shipped. Niemira expects both layaway and online shopping to help same-store sales in December.
Cyber Monday, the Monday after Thanksgiving, was reportedly the biggest online shopping day ever, but came after the November sales period ended.
Kohl's Corp posted a surprising drop in November same-store sales, and its shares fell more than 9pc. It said strong online sales late in the month would fall largely in December's sales tally.
Meanwhile, Tiffany & Co lowered its fiscal-year forecast yet again after quarterly same-store sales fell in Asia .
Sales were weak in the company's least expensive category, silver jewellry, suggesting price-conscious shoppers were hesitant to spend. Tiffany shares fell more than 6 percent.
The Standard & Poor's 500 retail index was down 0.4pc on Thursday, while the broader S&P 500 index rose 0.3pc.
Sales for the November-December holiday season look set to rise 4.1pc to $586.1pc this year after a 5.6pc increase in 2011, according to a National Retail Federation forecast given weeks before the Northeast storms. Other forecasts also hover around 4pc.
During the long Thanksgiving weekend, sales rose 12.8pc to $59.1bn, compared with a 16.4pc jump for the comparable weekend in 2011, according to an NRF survey.
"I think it's going to be a solid holiday, but we're not going to break any records," said Madison Riley, managing director at retail consulting firm Kurt Salmon.
Deloitte still expects a 3.5pc to 4pc rise in holiday sales, Paul said.
The ICSC predicted that December same-store sales would rise 4pc to 4.5pc, and expects overall same-store sales for the November-December period to be up 3 percent.
Discounts reign during the holiday season, with retailers hoping that customers who come in for deals such as Thanksgiving weekend "doorbusters" also pick up items that are not heavily marked down.
"I think a lot of that consumer activity was focused on the doorbusters," Riley said. "It may be a bit of a squeeze from a margin standpoint."
Big-box chains that offered deals on Thanksgiving night may have done better than mall-based apparel stores that opened later, Paul said.