Clothing stores saw reprieve despite slump
SAN FRANCISCO (Reuters) - U.S. consumers struggling with recession were willing to shop more for clothes in November because of extreme discounting and colder weather after months of avoiding apparel purchases.
Even though same-store apparel sales fell by 10.5 percent, the decline was not as bad as some investors had expected, so shares in the sector rebounded on Thursday.
U.S. apparel stores were helped late last month by the Thanksgiving holiday weekend, when many retailers attracted shoppers with discounts of 50 percent or even more.
Gap (GPS.N) stores were packed on Black Friday, the day after Thanksgiving, and teen retailer Aeropostale (ARO.N) said its stores were "maxed out" with shoppers in search of deals on its casual apparel.
Shoppers headed to Macy's Inc (M.N) across the country with coupons in hand, while even luxury shoppers were surprised to take advantage of deep discounts on designer clothing at Saks.
Although many retailers posted substantial sales declines, bright spots that beat Wall Street estimates included Gap, American Eagle Outfitters Inc (AEO.N), Saks Inc (SKS.N) and Pacific Sunwear of California Inc (PSUN.O).
"Numbers across the board were pretty bad but there were a lot of numbers that were less bad, so it is somewhat a game of expectation," said Needham & Co analyst Christine Chen.
While overall retail same-store sales in November dropped 2.1 percent, apparel sales fell 10.5 percent, according to Thomson Reuters Estimates.
Although that data reflects the struggles of retailers who sell apparel versus discount chains like Wal-Mart Stores Inc (WMT.N), it was better than the 11.5 percent drop expected, on average, by analysts.
The Dow Jones U.S. Apparel Retail Index .DJUSRA rose as high as 5.7 percent on Thursday, even though the Dow Jones industrial average .DJI fell 2.5 percent on the day. Shares of Talbots Inc (TLB.N), AnnTaylor Stores Corp (ANN.N), Collective Brands Inc (PSS.N), and Buckle Inc (BKE.N) rose in the double digits.
'MEDIOCRE BAD'
"People looked at the numbers, realized the world hadn't ended and took a deep breath. And that's what we're seeing today in the market," said Brean Murray Carret analyst Eric Beder, who characterized November sales as "mediocre bad" as opposed to "incredibly bad."
"November (is) likely the nadir," wrote Lazard analyst Todd Slater in a note.
A U.S. recession has hurt apparel retailers more than other store chains.
Wardrobe updates are largely viewed as nice to have, but hardly crucial. For much of 2008, shoppers have been spending their dollars instead on necessities like food or gasoline, or pressing bills like rent or heating. Continued...
