Bargain-hunting dents U.S. retailers' November sales

NEW YORK Thu Dec 5, 2013 5:15pm EST

People shop inside a Target store during Black Friday sales in the Brooklyn borough of New York, November 29, 2013. REUTERS/Eric Thayer

People shop inside a Target store during Black Friday sales in the Brooklyn borough of New York, November 29, 2013.

Credit: Reuters/Eric Thayer

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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Comments (9)
Overcast451 wrote:
Well – you companies have done a good job of shipping our jobs overseas. Don’t expect the constant increase Year over year now – expect a YOY decline.

I didn’t buy anything for Christmas – and I’m done with my shopping.
Maybe later in 2014, when I have some extra cash I might.

I’m not broke… and well, I want to keep it that way. I have some other ideas for family this year – plus, it’ll be a nice surprise and something different – other than retail junk.

Dec 05, 2013 9:43am EST  --  Report as abuse
USARealist wrote:
Maybe taxpayers are saving money to pay for the Obamacare disaster.

Dec 05, 2013 10:21am EST  --  Report as abuse
JohnnyES wrote:
So many negatives affecting consumers. From insurance questions, to stagnant wages, to job security. America is not a Country growing in prosperity and its really showing. Obama is foolish to think he can play Robin Hood and fix that. Much of the poverty in America has grown since Obama took office. More people on welfare now. What you have is a Country of have not’s who expect the have’s to support them. Not going to happen, America is made up of a history of the harder you work, the more benefits you reap. Wealthy people are not the enemy. They are the solution, but you have to give them a reason to reinvest in America. So far I don’t see Obama and government regulations helping that.

Dec 05, 2013 1:09pm EST  --  Report as abuse
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