October chain store sales expected to fall
NEW YORK (Reuters) - U.S. retail chains may report one of their worst monthly sales results this week as a global financial crisis leaves its mark on ordinary consumers, casting new doubt on holiday season sales.
Leading U.S. retailers, including Wal-Mart Stores Inc (WMT.N), Costco Wholesale Corp (COST.O) and J.C. Penney Co Inc (JCP.N) release October results on Wednesday and Thursday and Thomson Reuters is forecasting a decline of 0.1 percent.
"If the index actually comes in at -0.1 percent, this would be the weakest same store sales result ever registered since Thomson Reuters began collecting estimates in 2000," it said.
Department stores and specialty retailers are expected to be the worst hit, mitigated only slightly by shoppers seeking bargains at discount chains or drugstores.
Consumers who are already under pressure from high food and fuel prices and a crumbling housing market found themselves in an even worse off in October.
The financial crisis that began in September has intensified the prospect of a deep global recession and shaken consumer confidence in banks and the stock market.
"We're all one degree removed from somebody who has lost a job," said FBR Capital Markets analyst Adrienne Tennant. "It seems like it's so close to you ... and people put themselves in the what-if scenario, what if that happens to me? I think that's what is keeping people from spending."
Retailers, such as Chico's FAS Inc (CHS.N) and Talbots Inc (TLB.N), could cut third-quarter earnings forecasts, she said. Tennant now expects holiday sales, which include November and December, to fall -- something that has not happened since the National Retail Federation begin tracking such sales in 1992.
The NRF expects holiday sales to rise 2.2 percent, the lowest gain in six years. The trade group is waiting until after the U.S. Presidential election and updated data on consumer spending to decide whether to revise that forecast.
So far, the gloomiest forecasts expect the worst holiday shopping season in nearly two decades.
Banks have reduced lending, cut credit card lines or curbed new car financing, hurting the ability of shoppers to spend. Companies continue to shed jobs, with Circuit City Stores Inc CC.N on Monday becoming the latest employer to outline plans to slash positions.
In the volatile environment, consumers are slamming shut their wallets, putting away maxed-out credit cards and venturing to stores to only buy what is necessary or on sale.
DEPARTMENT STORES WORST HIT
Department store operators are expected to report the weakest October sales, according to Thomson Reuters. The group, which includes J.C. Penney and Kohl's Corp (KSS.N), is forecast to report a 10.8 percent drop in October sales at stores open at least a year, or same-store sales.
Mid-tier department stores have struggled this year as shoppers pare trips to the mall due to high gasoline prices or seek out cheaper retailers. But upscale chains such as Nordstrom Inc (JWN.N) and Saks Inc (SKS.N) are also hurting as the financial crisis roils stock portfolios and devalues real estate holdings. Continued...
