NEW YORK — The outlook for the holiday shopping season got a boost Thursday as retailers reported their third straight month of better than expected sales. Tax rebates and cooler weather gave consumers an incentive to spend freely, particularly on apparel.
The strong showing came across all retail categories, indicating a continuing improvement in the economy. Still, some analysts worry that the sluggish job market, while looking better, remains a big obstacle to a sustained increase in consumer spending.
"I’ve been trying to look for a new job, but it’s hard," said consumer Nicola Samuels, 26, of Atlanta. "It makes a big difference what kind of shopping you’re doing when you’re not totally sure about the job thing."
Merchants are hoping there will be more consumers like Anne Vick, who has increased her spending these past few months. She recently took a shopping trip to Chicago with her 18-year-old daughter and invested in major home improvements.
"I don’t think we would have done that last year," said the Wauwatosa, Wis., resident. "We just thought things are getting better. We can probably do this now."
Discounters and moderate-priced stores including Wal-Mart Stores Inc. and Target Corp. again turned in strong September results, but mall-based stores including Limited Brands Inc. and department stores such as Federated Department Stores Inc. and Nordstrom Inc. issued reports that were a pleasant surprise, exceeding expectations.
Sears Roebuck and Co., helped by strong sales of its new clothing brands including Lands’ End and Covington, also reported results that pleased Wall Street.
"The broad-based improvement is now at hand," said Michael Niemira, vice president at the Bank of Tokyo-Mitsubishi Ltd. "Clearly, the consumer is on the comeback. … This is an affirmation that this will be a much better holiday season, perhaps the best since 1999."
The Bank of Tokyo-Mitsubishi Ltd.’s same-store sales tally of 77 stores was up 5.9 percent for September, the strongest showing since March 2002, when it posted a 6.4 percent gain. Same-store sales — those from stores open at least a year — are considered to be the best indicator of a retailer’s health.
Niemira had expected an increase of 3.5 percent to 4 percent.
He believes same-store sales for the November and December period will be up in the range of 4.5 percent to 5.5 percent, the best performance since 1999, when the same-store sales tally posted a 5.4 percent gain.
The Washington, D.C.-based National Retail Federation projects total holiday sales, which exclude restaurant and auto sales, will be up 5.7 percent to $217.4 billion. Holiday sales in 2002 increased just 2 percent, to $205.6 billion, from the previous year.
But Frank Badillo, senior retail economist at Retail Forward, a consulting firm in Columbus, Ohio, is more wary, expecting only a modest improvement from last year. Badillo believes such factors as mortgage refinancing and tax rebates will dissipate before the holiday season.
"New jobs will have to kick in in order to pick up the pace" in spending, he said.
Still, a report from the Labor Department on Thursday was a comforting sign to the industry that the pace of layoffs is starting to ease. New claims for unemployment insurance fell last week to their lowest level in eight months.
For the workweek ending Oct. 4, new applications for jobless benefits declined by a seasonally adjusted 23,000 to 382,000, the best performance since Feb. 8 and a better showing than analysts had forecast. They had predicted claims would decrease to 395,000 last week.
Last week, the government reported that businesses added jobs in September for the first time in eight months.
September is the third most important month in a retailer’s sales calendar, behind December and November. And while the fall selling season is not a predictor of how much consumers will spend for the holiday, it does create a foundation for the rest of the year.
Again, retailers appear to be grappling with some of the same pre-holiday season issues as in the past few years.
No must-have item has emerged yet, although in toys, there are items like Fisher-Price’s Hokey Pokey Elmo and MGA Entertainment’s Bratz accessories that are selling well and beating expectations.
And merchants continue to struggle with falling prices, particularly as Wal-Mart continues its aggressive price cutting.
Copyright ©2003 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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