Sales reports signal a blue Christmas for many retailers

Associated Press

NEW YORK — Prospects for a strong holiday season grew dimmer Thursday after the nation’s largest retailers reported generally disappointing sales results for October.

While many specialty apparel retailers enjoyed healthy sales, many other stores languished amid slowing consumer spending.

"Don’t count on the consumer," said retail industry analyst Jeffrey Feiner of Lehman Brothers. "They’re not buying. I think the holiday season will be less than stellar."

Although some stores tried to put a positive spin on October’s lackluster results, blaming them on such temporary factors as unseasonably warm weather in the Northeast and a lack of must-have fashions, many industry executives believe retailing’s problems run much deeper.

The slowing economy, rising fuel prices and the stock market’s volatility have helped make consumers much more cautious about spending on discretionary items, or merchandise they don’t actually need.

The weak sales environment prompted a number of companies, including Wal-Mart Stores Inc., the world’s largest retailer and usually one of the industry’s best performers, and jeweler Zales Corp. to lower their sales expectations for the holiday season.

And J.C. Penney Co. Inc., which did not meet its sales target for the month, said it expects its third-quarter earnings loss to at least double from recent forecasts.

"There is clearly something fundamental going on here," said Michael Niemira, vice president of the Bank of Tokyo-Mitsubishi Ltd.

Niemira and others noted that a drop in consumer optimism has raised concerns that the holiday season will be difficult. On Tuesday, the Conference Board said its consumer confidence index fell sharply during October, indicating that Americans are becoming more conservative about spending.

The Bank of Tokyo-Mitsubishi retail sales index, which tracks sales at about 80 store chains, rose 3.2 percent last month from October 1999, when the index rose 5.7 percent. From January through October, the index rose 4.6 percent, compared with 7 percent in the same period last year.

October isn’t considered a make-or-break month for sales; it’s considered a transitional period when stores clear out fall merchandise and move into holiday velvets. However, even the heavy clearance sales didn’t spark spending, analysts said.

What shocked many analysts in particular were the disappointing sales results from discounters, which are seen as the bellwethers in consumer spending. Wal-Mart blamed its lower sales projections for the fourth quarter on declining traffic in its stores. It now expects its sales growth to be in the range of 3 percent to 5 percent, below analysts’ expectations of 4 percent to 6 percent.

However, Wal-Mart reported a 4.9 percent increase in October sales at stores open at least a year, meeting Wall Street targets.

Sales at stores open at least a year, known as same-store sales, are the most widely used measure of retailers’ strength.

Meanwhile, discounters Bradlees Inc., Ames Department Stores Inc., Kmart Corp., ShopKo Stores Inc. and Costco Inc. turned in results below analysts’ expectations.

"This is affecting the bedrock of spending," said John Pitt, managing director of Redbook Services. "They represent mainstream America. They cover a wide range of merchandise, from durables to food and clothing."

Penney blamed its 2.6 percent same-store sales decline in October on heavy markdowns. The retailer’s catalog sales, including, dropped 12 percent.

"Department stores continue to lose market share to specialty stores," said Kurt Barnard, publisher of Barnard’s Retail Trend Report, based in Upper Montclair, N.J.

Copyright ©2000 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Talk to us

More in Local News

FILE - A sign hangs at a Taco Bell on May 23, 2014, in Mount Lebanon, Pa. Declaring a mission to liberate "Taco Tuesday" for all, Taco Bell asked U.S. regulators Tuesday, May 16, 2023, to force Wyoming-based Taco John's to abandon its longstanding claim to the trademark. (AP Photo/Gene J. Puskar, File)
Hepatitis A confirmed in Taco Bell worker in Everett, Lake Stevens

The health department sent out a public alert for diners at two Taco Bells on May 22 or 23.

VOLLI’s Director of Food & Beverage Kevin Aiello outside of the business on Friday, May 19, 2023 in Marysville, Washington. (Olivia Vanni / The Herald)
Coming soon to Marysville: indoor pickleball, games, drinks

“We’re very confident this will be not just a hit, but a smash hit,” says co-owner Allan Jones, who is in the fun industry.

Detectives: Unresponsive baby was exposed to fentanyl at Everett hotel

An 11-month-old boy lost consciousness Tuesday afternoon. Later, the infant and a twin sibling both tested positive for fentanyl.

Cassie Franklin (left) and Nick Harper (right)
Report: No wrongdoing in Everett mayor’s romance with deputy mayor

An attorney hired by the city found no misuse of public funds. Texts between the two last year, however, were not saved on their personal phones.

Firearm discovered by TSA officers at Paine Field Thursday morning, May 11, 2023, during routine X-ray screening at the security checkpoint. (Transportation Security Administration)
3 guns caught by TSA at Paine Field this month — all loaded

Simple travel advice: Unpack before you pack to make sure there’s not a gun in your carry-on.

Heavy traffic northbound on 1-5 in Everett, Washington on August 31, 2022.  (Kevin Clark / The Herald)
To beat the rush this Memorial Day weekend, go early or late

AAA projects busy airports, ferries and roads over the holiday weekend this year, though still below pre-pandemic counts.

Logo for news use featuring the municipality of Snohomish in Snohomish County, Washington. 220118
Troopers: DUI crash leaves 1 in critical condition in Maltby

A drunken driver, 34, was arrested after her pickup rear-ended another truck late Tuesday, injuring a Snohomish man, 28.

Housing Hope CEO Donna Moulton raises her hand in celebration of the groundbreaking of the Housing Hope Madrona Highlands on Tuesday, May 23, 2023 in Edmonds, Washington. (Olivia Vanni / The Herald)
$30M affordable housing project to start construction soon in Edmonds

Once built, dozens of families who are either homeless or in poverty will move in and receive social and work services.

Smoke comes out of the roof of ReMyx'd, a restaurant on Smokey Point Drive, on Sunday, May 28, 2023, in Arlington, WA. (IAFF Local 3438)
Fire damages Arlington bar that received death threats

Arlington Police say initial indications are that fire at ReMyx’d does not appear to be intentionally set.

Most Read