U.S. retailers' October sales rise, but holiday concerns remain

Thu Nov 7, 2013 4:52pm EST

Shoppers push a trolley outside a Costco Wholesale store in Los Angeles, California March 6, 2013. REUTERS/Mario Anzuoni

Shoppers push a trolley outside a Costco Wholesale store in Los Angeles, California March 6, 2013.

Credit: Reuters/Mario Anzuoni

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(Reuters) - Costco Wholesale Corp and Victoria's Secret parent L Brands Inc were among the major U.S. retailers to report same-store sales gains for October, but many chains expressed caution heading into the holiday season.

Consumer confidence has dipped, in part because of slow employment growth, and shoppers have gravitated toward bargains in recent months.

A group of nine U.S. retailers reported an overall 3.7 percent increase in sales at stores open at least a year, better than analysts' forecasts of 2 percent, according to Thomson Reuters data.

Apparel chain Gap Inc's October same-store sales rose 4 percent, well ahead of the analysts' average estimate of 0.1 percent and its shares rose in after-hours trading.

The Standard & Poor's Retail Index closed down about 2 percent on Thursday, while the broad S&P 500 stock index fell 1.3 percent.

Costco reported a slightly bigger-than-expected 3 percent gain in same-store sales. Fresh food was among its best-selling products, and the weakest category was consumer electronics.

L. Brands said its same-store sales were up 8 percent, well above the 2.2 percent gain Wall Street analysts were expecting, according to Thomson Reuters.

The 16-day U.S. government shutdown at the start of the month weighed on consumer confidence and slowed job growth. U.S. job growth probably slowed sharply in October, with the unemployment rate ticking higher, according a Reuters survey of economists published this week.

The International Council of Shopping Centers is forecasting same-store sales will rise 3 percent to 4 percent in November, in part because the shutdown has ended, eliminating one source of consumer anxiety, Chief Economist Michael Niemira said. But the trade group still expects only modest growth this holiday season.

Many retailers noted worrisome patterns as retailers head into the holiday season.

Drugstore chains Walgreen Co and Rite Aid Corp reported softer sales of general merchandise and slower shopper traffic, continuing a trend many companies have noted in recent months.

Fred's Inc said more shoppers made greater use of its layaway program. Lower-income customers typically use such programs, paying for goods in installments before picking them up.

J.C. Penney Co Inc, which is not in the same-store sales index, reported its first monthly increase in nearly two years, but deep discounting had a lot to do with that.

"We expect the holiday season to be extremely competitive," Penney Chief Executive Officer Myron Ullman said in a statement.

Cool weather helped some retailers, such as low-priced clothing chain Cato Corp, as shoppers replenished their autumn wardrobes.

But Cato also said it expected a tough holiday quarter, as did teen chain Abercrombie & Fitch Co.

The Buckle and Zumiez Inc, which also cater to teens, reported only modest same-store sales gains for October.

Morgan Stanley last week issued a research note forecasting the weakest holiday season since 2008, when the financial crisis decimated retail sales.

Perfume maker Coty Inc, whose U.S. customers include Wal-Mart Stores Inc and Target Corp, said on Thursday that some of its large retail clients in the mass market had cut back on orders.

(Reporting by Phil Wahba in New York; Editing by Lisa Von Ahn, Bernard Orr)

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Comments (4)
AZreb wrote:
With thousands to lose unemployment benefits at the end of the year, how can they justify spending money they won’t have unless Congress and the administration extend those benefits? Millions have lost SNAP (food stamp) money since that was cut, so will be spending more for food for their families, leaving less for holiday spending.

Add to that the fuel costs to heat a home during the coming winter months, plus the ever-rising costs of food and other necessities. Anyone with the sense of a half-grown goose will cut back on unnecessary spending – and that includes presents.

Nov 07, 2013 9:35am EST  --  Report as abuse
Mylena wrote:
I could tell them: charge the right price in any item i you will succed

Nov 07, 2013 11:55am EST  --  Report as abuse
Daleville wrote:
The holidays should be about being together not about getting presents.

When did Christmas become all about the gifts instead of the reason it was originally for?

I am so sick and tired of Christmas decorations going up before Thanksgiving, endless Christmas music, endless Christmas ads. You are made to feel bad if you aren’t buying expensive electronic gifts for your kids or a new car for your wife. How many people actually buy someone a new car for Christmas?

I also refuse to buy anything for Christmas at a store that forces its employees to work on Thanksgiving. Absolutely not!

I don’t expect that we are going to give each other gifts for Christmas. We usually don’t. We spend the day together and take an evening drive to look at the lights on the Valley Pike. There are some beautiful displays and we always enjoy that.

I didn’t think that Christmas could be made any more commercial but I was wrong.

Nov 11, 2013 1:34pm EST  --  Report as abuse
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