- The Secret Lives of Traders—Seeking the Next Hot Thing
- Markets Finally Get Greek Deal —So Where's the Rally?
- Warren Buffett: Stocks Will Outperform Gold and Bonds
- Alibaba Plans to Buy Back Yahoo Stake, Go Private
- Greece Deal Fails to Convince, EU Demands More
- 'Mortgage Deal from Hell' Hurts Sound Borrowers: Bove
- Clint Eastwood: Super Bowl Ad Endorses No One
- Zynga, Hasbro Partner to Make Toys, Games
- Home Builder Optimism Up, Industry Expert Says
MOST SHARED
- New York Fashion Week Hits the Runway as Colors Pop
- Cramer: Berkshire Hathaway Is a 'Screaming Buy'
- Australia Central Bank Repeats Policy Right for Now
- Greece Deal Fails to Convince, EU Demands More
- Steelers' Antonio Brown Spends Super Bowl Week with Twitter Fan Turned BFF
- Warren Buffett: Stocks Will Outperform Gold and Bonds .. and They're Safer 'By Far'
- Love @ First Byte: The Secret Science of Online Dating Preview
- LinkedIn Earnings Bode Well for Hiring and Social Media
- Lightning Round: Yahoo!, CEC Entertainment, Standard Pacific and More
- Alibaba Group Plans to Take Hong Kong Unit Private: Report
MOST POPULAR
HOT ON FACEBOOK
Retailers Ring Up Weakest Growth in Three Years
Text Size 
News Editor
September same-store sales growth falls to its slowest pace in three years, forcing a number of retailers to cut their third-quarter earnings forecasts.
 |
Paul Sakuma / AP |
The Thomson Financial Same Store Sales Index rose 1.4% in September, below the estimated 2.1% increase and last year's 4.2% growth. That is the lowest figure for the index since August 2004's 1.2% gain.
But Wal-Mart Stores, the world's largest retailer, bucked the trend. Despite posting same-store sales that were weaker than analysts were expecting, Wal-Mart raised its forecast for the quarter, sending its shares higher.
Wal-Mart said sales in stores open at least 12 months, a key metric of retail sales growth, rose 1.4 percent. That was slightly lower than the average analyst estimate of 1.8 percent reported by Thomson Financial, but within Wal-Mart's own forecast, which called for 1 percent to 3 percent growth.
Excluding Wal-Mart, Thomson's index still climbed just 1.4%, versus growth expectations of 2.2% and the prior year's 6.3% increase.
The retailer said sales growth was driven by its grocery and pharmacy departments, but, like many other retailers, it faced weak home and apparel sales. Wal-Mart blamed unseasonably warmer weather. That comment was echoed by other retailers, including several of those who reduced estimates for the quarter.
Apparel Demand Weak
The balmy temperatures, especially in the Northeast and Midwest, cooled demand for items such as fall sweaters and fleece jackets.
“Warm weather no doubt explains part of the chill in September sales, but shoppers are also clearly telling us they want to hold the line on spending," said Frank Badillo, a senior economist for market researcher TNS Retail Forward. "That was the case for back-to-school spending and shoppers are also cutting their plans for Halloween and the holidays."
Investors will get a further read on the state of the consumer on Friday, when the Commerce Department reports its retail sales report at 8:30 am New York time.
Men's Warehouse, American Eagle Outfitters, Target, Limited, Nordstrom, and JC Penney were all among those reducing their estimates for the third quarter due to weakness in September. Kohl's said earnings would be at the low end of its forecasted range.
American Eagle Outfitters posted a 2 percent decline in September same-store sales on Wednesday after markets closed.
Limited Brands also lowered its forecast. The retailer's sales fell 4.4 percent, hurt by a decline in sales of its intimate apparel and sleepwear. Its Victoria's Secret and Bath & Body Works stores were hurt by negative traffic levels, the company said.
Gap continued to struggle. September same-store sales fell 7 percent, worse than the 4.4 percent decline that analysts expected.
Target said same-store sales increased a slim 1.2 percent, dragged down by weak apparel sales. Analysts had expected a 2.2 percent estimate. The company said it believes its full-year earnings per share results will be below $3.60. The company previously said it expected to earn "slightly more or slightly less" than that amount.
High-End Weakens
Another area of unexpected weakness was among high-end department stores J.W. Nordstrom and Saks. Both reported a healthy sales increases, but the gains fell short of analyst estimates.
Nordstrom reported an increase of 3.1 percent, but that missed the average analyst estimates of 5.0%, reported by Thomson Financial.
Although Nordstrom said it was pleased with its sales for the month, it warned that it entered the quarter with inventory levels above its plans, and therefore lowered its earnings outlook.
Saks fared better than Nordstrom. Although its sales fell short of view, it held on to its earnings forecast.
Among the headwinds facing retailers are rising gas prices and a weak housing market. Gas prices reversed their downward trend in September and actually rose 17 percent, on average, in September, Bear Stearns analyst Christine Augustine said in a research note.
“Higher gas prices likely drove fewer mall visits, while warmer weather likely hindered demand of fall apparel,” Citigroup analyst Kimberly Greenberger said. Ahead of the release of the retail reports, she estimated mall traffic fell 3 percent in September.
- Many have called to abolish the Federal Reserve. But what would happen if it was dissolved for good?
- Entrepreneurs have increasingly been buying back their companies over the last three years.
- Where are the best city locations for singles to take the online dating plunge?
- A Steelers fan spent a week with wide receiver Antonio Brown- and it was all due to tweeting.
- Here’s a look at the woman behind the newest collectible toy that kids love.
- Grab a brew—or not—and click ahead to experience the world’s most highly rated beers.
Data is a real-time snapshot *Data is delayed at least 15 minutes
