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Retailers report September boost in sales
NEW YORK (AP) — Retailers reported surprisingly solid sales gains for September, boosted by back-to-school shopping, much of it pushed into September by parents who had put off trips to the mall.
The results Thursday give hope for a positive holiday shopping season, although Americans still are dealing with an uncertain economy and high unemployment.
The International Council of Shopping Centers' index of September retail sales rose 2.6 percent, near the low end of its forecast, which ranged from 2.5 percent to 3 percent growth.
"There was really good performance from a handful of stores, a number of pretty good performers, and some are still struggling," said Mike Niemira, ICSC director of research and chief economist.
He added that while a 2.6 percent increase isn't that strong of a number on its own, the tone of retailer' reports seems better than previous months, even though September is the first month in which retailers are comparing against positive results from 2009, making comparisons more difficult.
"To the extent some retailers talked about implications for holidays, that seemed quite positive," Mr. Niemira said.
An array of stores including Macy's Inc., Saks Inc., Victoria's Secret, Bath and Body Works parent Limited Brands Inc. and Abercrombie & Fitch reported better-than-expected results.
"I think retailers are pleasantly pleased by the strength of the back-to-school season," said Ken Perkins, president of research firm RetailMetrics. "It's turning out to be a solid month, which should bode well for the holiday shopping season."
An improving stock market also might have spurred some shoppers to spend, he noted. The S&P 500 rose 9 percent during the month.
"It's clear that back-to-school came later this year once again, with parents toting their children back to the malls and outlets in the first weeks of September after browsing in August," said Wall Street Strategies analyst Brian Sozzi.
Several retailers, including the Gap, Wet Seal and Target, reported that revenue dropped off in the second half of the month, particularly in the last week. Weather was a factor — there was a heat wave on the West Coast and tropical storms in the East — but Mr. Sozzi said that might also indicate "the consumer has prepared themselves to pause prior to the holidays, preferring to bolster savings in the lead-up to the holidays."
The news came as the Labor Department reported applications for unemployment benefits fell last week for the fourth time in five weeks, a sign that layoffs are declining. Still, claims remain at an elevated level consistent with weak job growth. Employers aren't hiring enough to bring down the 9.6 percent unemployment rate.
Costco's revenue at stores open at least a year rose 5 percent for the month of September. Analysts polled by Thomson Reuters earlier expected a 4.5 percent increase. The company also reported that its fourth-quarter net income rose 16 percent on higher revenue from membership fees and international operations.
Macy's Inc.'s revenue rose 4.8 percent, ahead of analysts' expectations of a 3.3 percent gain.
"The back-to-school season has been one of our most successful in years," CEO Terry J. Lundgren said in a statement.
J.C. Penney's revenue in stores open at least one year rose 2.9 percent, slightly missing the 3.1 percent gain analysts expected. The company said consumers are shopping closer to the time they need items such as back-to-school products.
High-end retailers reported strong results as well. Saks' revenue in stores open at least one year rose 6.5 percent, nearly double the 3.8 percent gain analysts predicted.
Nordstrom's revenue rose 7.5 percent, better than the 4.3 percent analysts expected.
Limited Brands' revenue in stores open at least a year rose 12 percent, almost triple the 4.1 percent analysts expected.
Abercrombie & Fitch Co. saw a 13 percent increase, far above the 3.6 percent rise analysts expected. The preppy teen retailer has been lowering prices in an effort to entice shoppers into its stores. It cut costs by 12 percent during the month and 14 percent year-to-date. Results sent its shares up 8 percent in premarket trading.
Target said sales of food and health care products were strong but clothing sales dropped off in the last week of the month. Its revenue in stores open at least a year rose 1.3 percent in September, missing analyst predictions of a 1.9 percent rise. Target expects the figure to rise in the low single digits in October.
The Gap reported that revenue in stores open at least one year fell 2 percent, worse than the flat result analysts expected.
In a recorded monthly sales call the company said that, because of the weaker-than-expected sales, the company expects "some pressure in October to clear through fall inventory in advance of the holiday," which could mean heavy discounts.
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