Mixed Bag for Retail Sales, as Teen Retailers Fall Short - Retail * US * News * Story

Runway Angels
The superbowl of fashion shows, models walk down the runway at the 2009 Victoria's Secret Show.
Smartphone Guide
Here's a need-to-know guide to nine devices, based on features, price, network and platform.
Wines for the Holidays
Not quite sure what wine to pair with Turkey or Creme Brulee? Our experts do.

FEATURED QUIZZES

How Well Do You Know Your Bird?
Let's talk turkey. Test your turkey knowledge and perhaps pick up a bit of trivia to trot out at your holiday meal.
A Healthier & Wealthier You
Take the following quiz and find out how much you know about the impact of obesity on the health of the U.S. economy.
The Billionaire BFF's
Philanthropists. Bridge partners. Hockey players. Which responses are based on facts from Buffett's and Gates' real lives?

SPECIAL REPORTS

Winterizing Your Portfolio
If 2009 was the winter of our discontent, will 2010 be a winter wonderland for investors? A lot depends on the recovery—or lack thereof.
Investor's Guide to Real Estate
Some even say the long-awaited recovery is here. Regardless, buyers and sellers alike can profit from our guide.
Alternative Investing
Stocks and bonds? Sure. But it's a big world out there for investors.

CNBC ON DIGG

Retail Sales Fall Short as Industry Preps for Holidays

Published: Thursday, 5 Nov 2009 | 10:35 AM ET

Text Size

By: CNBC.com

Despite signs of improved foot traffic at retail stores, the majority of retailers posted same-store sales Thursday that fell short of Wall Street estimates.

The reports put pressure on retail stocks, as investors viewed the results, which were less robust than those in September, as disappointing ahead of the all-important holiday season.

According to Thomson Reuters, more than half — some 52 percent of those retailers reporting — reported same-store sales below analysts' estimates. Overall, Thomson Reuters said retail sales rose 1.8 percent in October, slightly below the estimated 2.0 percent gain.

"We are beginning to see some signs of foot traffic improving," said Dana Telsey, chief research officer of Telsey Advisory Group. She sees encouraging trends within the results.

For example, there are early signs that some consumers may be beginning to shift from discounters to more discretionary purchases as retailers such as Saks [SKS Loading... () ], J.W. Nordstrom [JWN Loading... () ], and Gap [GPS Loading... () ] topped estimates.

"So, are they going to spend on need or want?" Telsey said. "There could be a mix of both."

As teen unemployment remains at a high level, some of the teen apparel retailers came up short. Among those that missed estimates was American Eagle [AEO Loading... () ], which posted a same-store sales decline of 5 percent. The company was expected to post a gain of 2 percent.

Aeropostale [ARO Loading... () ] posted a same-store sales gain of 3 percent, which was far worse than the 13.6 percent increase that was expected. Still, the company raised its earnings forecast.

According to Telsey, there may be more of this ahead. She expects holiday sales will be more about earnings growth than top-line growth. Retailers are keeping tight controls on inventory and planning on being promotional to woo shoppers.

RELATED LINKS

Target [TGT Loading... () ], for example, fell short of analysts' estimates for same-store sales growth. The discount retailer posted a same-store sales decline of 0.1 percent, slightly worse than the breakeven results analysts had expected.

Despite this, Target said October sales were "slightly" above its plan and it had "clean inventories" heading into the holidays. Target said it expects November same-store sales to be "essentially flat" with last year's results as the environment remains challenging.

October is a strange time period for retailers. Consumers are usually done with their back-to-school shopping and not really plunging with full force into their holiday shopping yet. This may be one factor behind some of the mixed signals that turned up in the same-store sales results.

J.P. Morgan analyst Charles Grom said the results were "strange" because the extent of the mixed performance across the retail sector. Still, he is expecting to see improvement in the sector as it heads into the holidays.

"The consumer does appear to be coming out of hibernation to some extent," Grom said.

Among those topping estimates were Costco Wholesale [COST Loading... () ], which reported a 5 percent increase in its October same-store sales.

Drugstore retailer Walgreens [WAG Loading... () ] and children's apparel retailer Children's Place [PLCE Loading... () ] also topped estimates.

Department stores showed mixed results, with Macy's [M Loading... () ] and J.C. Penney [JCP Loading... () ] down 0.8 percent and 4.5 percent, respectively, both under expectations. Kohl's [KSS Loading... () ] also missed, posting a 1.4 percent sales gain.

For full results as they come in, see the table below:

October Same-Store Sales

Retailers	October 2009 Same-Store Sales Est.	October 2009 Same-Store Sales Actual
Costco Wholesale (total sales)	4.7%	5.0%
Target	Breakeven	(0.1%)
BJ's Wholesale	(0.3%)	3.5%
JCPenney	(2.3%)	(4.5%)
Kohl's	6.2%	1.4%
Dillards	(8.0%)	(8.0%)
JW Nordstrom	3.0%	6.5%
Saks	(3.6%)	0.7%
Macy's	(0.1%)	(0.8%)
Gap	1.6%	4.0%
TJX	10.1%	10%
Limited	(2.7%)	(4.0%)
Ross Stores	7.3%	9%
Stein Mart	(6.5%)	(4.9%)
Abercrombie	(14.7%)	(15%)
American Eagle	1.7%	(5%)
Children's Place	(3.1%)	(2.0%)
Aeropostale	13.8%	3%
Hot Topic	(3.5%)	(2.6%)
Wet Seal	(7.8%)	(1.3%)
The Buckle	5.3%	4.3%
Zumiez	(6.7%)	(8.9%)
Walgreen	4.8%	4.9%
Rite Aid	0.1%	(0.5%)