Retailers' holiday season to withstand Sandy effect
(Reuters) - A handful of retailers expect the massive storm on the U.S. East Coast this week to hurt demand in November, while overall holiday sales should still show the slow growth that was previously forecast.
Costco Wholesale Corp (COST.O), Nordstrom Inc (JWN.N) and Rite Aid Corp (RAD.N) all said on Thursday that November sales would suffer because of store closures due to Sandy, one of the largest storms to hit the United States.
Costco, however, said the effects would be minimal.
Industry watchers also downplayed any possibilities of a major drop in sales because of the storm.
"November is so huge, the last few weeks of the month can be very big, and so if you are up and running by then, you should be OK," said Rahul Sharma, from retail consultants Neev Capital.
Sandy hit during the November sales period for most retailers, so few said the storm had affected them in October.
"November is where we will see the impact, but I think it'll be marginal," said Tom Clarke, director of AlixPartners' retail practice. The consulting firm still expects sales for the holiday season to be up 3.5 percent to 4 percent.
The International Council of Shopping Centers is also sticking to its holiday sales forecast, Chief Economist Michael Niemira said.
The ICSC expects November sales at stores open at least a year, excluding drugstores, to rise 4.5 percent to 5.5 percent. That compares with a 5 percent increase in October, Niemira said.
At the 17 chains tracked by Thomson Reuters I/B/E/S, same-store sales rose 4.7 percent in October, versus analysts' expectations of a 4.3 percent increase.
October is usually a light month for retail sales, falling right after the back-to-school season and just before the holiday shopping frenzy kicks in.
The sales reports came the same day the Conference Board said U.S. consumer confidence had risen in October to its highest level in more than four years as Americans were more upbeat about improvements in the labor market.
NO DENT TO HOLIDAY BUDGETS
Analysts said they did not think that consumers who stocked up on essentials ahead of Sandy would cut their holiday budgets.
"I don't think it will affect (shoppers') holiday spending one bit whatsoever," said NPD Group chief industry analyst Marshal Cohen.
Cohen said many people had left affected areas and were living somewhere else temporarily, so they were not making significant purchases.
"There is a repair budget that is going to affect some of the spending, but I still think it is a small percentage of the consumers across the country," he added.
The same-store sales tallies provide just a glimpse into overall sales at major U.S. chains. Many retailers, including Home Depot Inc (HD.N), Lowe's Cos Inc (LOW.N) and Wal-Mart Stores Inc (WMT.N), may have gotten a boost ahead of Sandy, but do not report monthly results. Neither do grocery chains, where shoppers stocked up on water and nonperishable food in the days leading up to the storm.
Among the October results reported on Thursday, Limited Brands Inc (LTD.N) and Gap Inc (GPS.N) both missed comparable-sales estimates for the month, but gave quarterly earnings outlooks above Wall Street's expectations.
Limited, the parent of the Victoria's Secret lingerie chain, raised its profit estimate for the October quarter.
The company, which reports results on November 14, said it expected earnings of 23 cents to 25 cents a share, excluding items, up from an earlier outlook of 15 cents to 20 cents. Analysts on average had forecast 21 cents, according to Thomson Reuters I/B/E/S.
Gap expects to earn 61 cents to 63 cents a share, while analysts were expecting 54 cents.
Among the retailers that beat estimates, Macy's Inc (M.N) took a hit because 200 of its namesake and Bloomingdale's department stores were affected by Hurricane Sandy, but the company said it was "confident" that it can make up most of the lost sales.
Macy's also raised its same-store sales growth outlook for the second half of the year to 4 percent from 3.7 percent.
Discounter TJX Companies Inc (TJX.N) reported higher-than-expected sales as well, indicating that the average shopper was still out hunting for deals.
(Additional reporting by Jessica Wohl in Chicago, Phil Wahba and Dhanya Skariachan in New York, Siddharth Cavale in Bangalore; Editing by Alden Bentley, Brad Dorfman and Lisa Von Ahn)
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