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Retailers see sales begin to recover in September
NEW YORK -- The nation's stores saw their first sales gain in 14 months in September, a sign of life from shoppers that fuels some hope for the holiday shopping season.
A late Labor Day and delayed school openings helped boost back-to-school sales in September. And stores' figures are looking better as they are compared with last September when spending plummeted amid the ballooning financial meltdown.
But analysts dissecting the figures say they feel encouraged by Thursday's reports even as they acknowledge that business still remains weak and consumers tight-fisted.
"Let the retail recovery begin," said Michael P. Niemira, chief economist at International Council of Shopping Centers. "This is the start of a better performance and better fundamentals."
The International Council of Shopping Centers-Goldman Sachs preliminary tally registered an increase of 0.1 percent for September, compared with a 1.0 percent drop a year ago. While still tepid, the results mark the first gain since July 2008, when the index was up 1.3 percent.
The tally is based on sales at stores opened at least a year and are considered a key indicator of a retailer's health. The tally excludes Wal-Mart Stores Inc., which stopped reporting monthly sales after it released April results. Stores had struggled with 13 straight months of sales declines, hitting the bottom in November 2008 when sales plummeted 7.7 percent.
Niemira had projected a 2 percent drop in sales at stores open at least a year for September.
As stores announced their results Thursday, J.C. Penney Co., Macy's Inc. and Target Corp. all reported smaller-than-expected declines in sales at stores open at least a year. Limited Brands Inc., which runs Victoria's Secret and Bath & Body Works, and accessories chain The Buckle Inc. both posted increases for the month.
Still, industry worries remain high heading into the holiday shopping season because shoppers, many of whom were afraid to spend a year ago, are now grappling with rising job losses, reduced hours or unavailable credit. The unemployment rate is now 9.8 percent, up from around 7 percent last holiday season.
The latest government report on jobless benefits, released Thursday, showed that the number of newly laid-off workers filing first-time claims for jobless benefits fell to the lowest level since early January, as layoffs abate amid a fledgling economic recovery.
The fourth drop in new claims in five weeks reflects an improving labor market, but employers are still hesitant to hire new workers and the unemployment rate is expected to keep climbing well into next year.
Credit also remains tight. A report released Wednesday by the Federal Reserve, shows that consumers reduced their borrowing for the seventh straight month in August as households cut spending and banks reduced credit card limits.
"Consumers remain under pressure on multiple fronts," said Ken Perkins, president of retail research firm Retail Metrics. "I don't think consumer spending is going to see a substantial uptick. Shoppers are concerned about rebuilding their balance sheets."
In this climate, purveyors of fashion and nondiscretionary items continue to post sluggish sales, while low-price stores benefit from shoppers switching to cheaper stores and brands.
Still, the tone was better in Thursday's reports, as several merchants including Target, J.C. Penney, American Eagle Outfitters Inc. and TJX Cos. raising their profit outlook based on their better-than-expected performance.
Target said sales at stores open at least a year fell 1.7 percent, less than the 2 percent that analysts surveyed by Thomson Reuters had expected.
Macy's had a 2.3 percent decline, less than the 4.6 percent drop that analysts estimated. J.C. Penney had a 1.4 percent decline for September, lower than the 3.5 percent decline Wall Street estimated.
TJX enjoyed a 7 percent gain, surpassing the 4.1 percent estimate.
Gap Inc., dragged down by sluggish sales at its namesake stores and Banana Republic, posted a 1 percent sales decline, a bit worse than the 0.4 percent dip that analysts had expected. Its lower-price Old Navy division continued to shine, posting a 13 percent gain in sales at stores opened at least a year.
Limited Brands reported that sales in stores open at least a year rose 1 percent in September; that was better than the 2.4 percent slide that analysts had predicted.