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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.
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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
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], J.W. Nordstrom [JWN
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], and Gap [GPS
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] 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
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], which posted a same-store sales decline of 5 percent. The company was expected to post a gain of 2 percent.
Aeropostale [ARO
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] 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.
Target [TGT
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], 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
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], which reported a 5 percent increase in its October same-store sales.
Drugstore retailer Walgreens [WAG
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] and children's apparel retailer Children's Place [PLCE
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] also topped estimates.
Department stores showed mixed results, with Macy's [M
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] and J.C. Penney [JCP
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] down 0.8 percent and 4.5 percent, respectively, both under expectations. Kohl's [KSS
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] 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%) |
source: Thomson Financial, Company reports. Figures in parenthesis are losses. |
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Data is a real-time snapshot *Data is delayed at least 15 minutes