Retailers Posting Stronger-Than-Expected Sales

November's monthly sales reports showed there were plenty of reasons for retailers to be merry as the critical holiday shopping season got underway.

Christmas shoppers attend the Galeria Kaufhof warehouse in Munich, Germany.
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Christmas shoppers attend the Galeria Kaufhof warehouse in Munich, Germany.

Retailers across many different categories reported monthly same-store sales that exceeded analysts' estimates, as shoppers came out in droves lured by frequent and generous sales and discounts.The trend benefited discounters such as Costco Wholesale and Target as well as apparel retailers such as Limited and Abercrombie & Fitch and department stores such as Macy's .

The Thomson Reuters Same-Store Sales Index was expected to rise 3.6 percent in November, compared with a 0.5 percent gain in the prior year, but the actual results far exceeded that, and the index climbed 6.0 percent.

Consumer Nation - Holiday Central Edition - See Complete Coverage
Consumer Nation - Holiday Central Edition - See Complete Coverage

Shoppers were coaxed into spending by good deals retailers were offering, and since many shoppers have not been spending on themselves for a while, they were ready for a splurge.

"There are any number of signs that are harbingers of a good holiday season,"said Mary Delk, a director at Deloitte Consulting. Delk said she was encouraged when consumers continued to shop in the days after the initial Black Friday rush.

"I had half expected that there would be a falloff and that there would have been some cannibalized by the earlier discounts," she said. But it seems that shoppers are buying more items from discretionary categories and that consumers are shopping for themselves, she said.

Encouraging signs came from many areas. One sign was that department stores and specialty retailers did better in November than they had in prior months.

Macy's , for example, reported a same-store sales gain that topped analysts' estimates and it raised its fourth-quarter earnings forecast.

J.C. Penney also posted stronger-than-expected same-store sales gains, and they called out that they had seen customers shopping for themselves.

But Sherif Mityas, a partner at A.T. Kearney's retail practice, said he expects consumers to take a breather ahead of the holidays.

"Consumers are still very catious," Mityas said. "They are wary about the economy, they don't know if tax breaks are coming or not coming...There's a lot of uncertainty that is beneath the surface that is still working on Main Street."

One sign of that was what happened in the teen sector, Mityas said. He said the results showed consumers are still very focused on what they are buying.

There were some strong results in the teen sector, with Abercrombie reporting a 22 percent gain compared with the 6.8 percent estimate analysts were expecting, according to Thomson Reuters.

Zumiez reported a 20.7 percent same-store sales increase in November, topping estimates that called for a 12.6 percent gain, while rival teen retailer the Buckle saw a 7.9 percent gain, solidly ahead of the 3.6 percent analyst estimate published by Thomson Reuters.

But teens are fickle, and they stick with the fashion trends. Even steep Black Friday discounts weren't enough to save Aeropostale's results. The retailer said same-store sales fell 1.0 percent when analysts had estimated a 0.9 percent gain.

Hot Topic also posted a 2.1 percent decline in same-stores sale, but the loss was narrower than analysts were expecting. They had forecast a 4.6 percent decline.

Limited turned in another month of strong results, with its same-store sales rising 10.0 percent, compared with a 4.0 percent estimate. The company's Victoria Secret stores continued to show strong momentum.

The news was also good at warehouse club store Costco Wholesale. It's total same-store sales rose 9.0 percent, outpacing the 6.2 percent average analyst estimate.

Target said they saw strong traffic throughout the month and were "well-positioned" for December.

Target has been helped by a promotion it offered where customers can get 5 percent back on their purchases if they use their Target credit card.

A complete summary of the results follows:

November 2010 Same-Store Sales

November 2010 Estimates
November 2010 Actuals
Costco Wholesale 6.2% 9.0%
BJ Wholesale 3.9% 3.8%
Target 3.7% 5.5%
JC Penney 3.1% 9.2%
Kohl's Department Store 2.8% 6.1%
Dillards Department Store 3.0% 8%
JW Nordstrom 3.8% 5.1%
Saks Department Store 9.5% 5.3%
Stage Stores 2.8% 2.4%
Macy's 5.0% 6.1%
Gap 2.6% 4%
TJX 2.9% 3.0%
Limited 4.0% 10.0%
Ross Stores 2.8% 6.0%
Stein Mart 0.5% Flat
Abercrombie 6.8% 22%
American Eagle 1.4% Flat
Aeropostale 0.9% (1.0%)
Hot Topic (4.6%) (2.1%)
Wet Seal 0.8% 7.0%
The Buckle 3.6% 7.9%
Zumiez 12.6% 20.7%
Walgreen 2.9%
Rite Aid (1.0%) (1.3%)
Source: Thomson Reuters,company reports. Figures in parenthesis are losses.