Bargain-hunting dents U.S. retailers' November sales
NEW YORK (Reuters) - Several major U.S. retailers posted disappointing sales for November after shoppers remained cautious about spending, the latest sign that the holiday season is shaping up to be the toughest in years.
Some companies that reported sales gains had to offer more bargains to attract shoppers.
The need to keep discounting, which stems from sagging consumer confidence and shoppers trained to wait for bargains, will persist through the remainder of the season, said Edward Jones analyst Brian Yarbrough.
"Retailers have created this expectation," Yarbrough said, noting that he is getting more and more promotional e-mails from national chains.
Costco Wholesale Corp said sales at stores open at least a year rose 2 percent, below the 3.3 percent increase analysts were looking for, according to Thomson Reuters. Business suffered from a drop in consumer electronics sales.
Costco shares were down 1.9 percent in morning trading. The Standard & Poor's 500 Retail Index was unchanged, and the broad S&P 500 fell 0.3 percent.
A same-store sales drop of 5.5 percent at L Brands Inc, owner of the Victoria's Secret lingerie chain, was far steeper than the 1.1 percent decline analysts were projecting. This was the first time the company missed estimates since the 2009 recession.
L Brands said an increase in promotions last month had hit its gross margin. Its shares fell 1.3 percent.
Dollar General Corp, which does not report monthly sales, said its same-store sales last quarter rose 4.4 percent. The gain, one of the biggest among large retailers, reflected how much customers are looking to save money.
Wall Street analysts are expecting 11 top retailers to report a 2.7 percent increase in same-store sales for November, according to Thomson Reuters. Excluding drugstore operators, which get two-thirds of revenue from prescriptions, that gain is estimated at 2.3 percent.
HOLIDAYS 'WILL BE DIFFICULT'
Retailers have been contending with low consumer confidence and the need to prod shoppers with bargains this holiday season, which has six fewer days because of a late Thanksgiving.
The National Retail Federation on Sunday said U.S. shoppers had spent 2.9 percent less this year over the Thanksgiving weekend, the kickoff to the holiday season.
The Conference Board, an industry group, said last week that U.S. consumer confidence fell in November after a sharp drop in October as Americans worried about their future jobs and earnings prospects.
Earlier this week, J.C. Penney Co Inc reported a 10.1 percent comparable sales increase, partially reversing a disastrous decline in 2012, but the department store chain had to resort to aggressive bargains. The "environment will remain as competitive" through the holiday season, Chief Executive Officer Myron Ullman said.
In a sign of how hard retailers are pushing for sales this holiday season, rival Kohl's Corp said Thursday that its stores would be open around the clock between December 20 and Christmas Eve.
Walgreen Co said a "meaningful" increase in promotions had brought in more shoppers, helping the drugstore chain post a 1.9 percent rise in comparable sales of general merchandise.
Stein Mart Inc, an off-price chain that sells clothes and home goods at deep discounts, and apparel retailer Gap Inc were the only retailers in the Thomson Reuters index to report stronger-than-expected sales for November.
Fred's Inc, a general merchandise chain, said comparable sales were unchanged, below expectations.
Rite Aid Corp said comparable sales of general merchandise at its drugstores rose only 0.4 percent.
Sales were also flat at Cato Corp, a chain of low-priced clothing. "We continue to expect that the remainder of the holiday shopping season and fourth quarter will be difficult," said CEO John Cato.
Teen retailer Buckle Inc said same-store sales fell 0.6 percent, while smaller rival Zumiez Inc reported a weaker-than-expected 1.7 percent rise.
On Wednesday, Aeropostale Inc forecast a much bigger-than-expected loss for the holiday quarter and said it expected the "heavily promotional environment in the teen retail sector to continue."
(Reporting by Phil Wahba in New York and Devika Krishna Kumar in Bangalore; Editing by Lisa Von Ahn)
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