September sales disappoint, some forecasts cut
NEW YORK (Reuters) - Retailers posted disappointing September sales on Wednesday, hurt by a global financial crisis that prompted shoppers to turn more frugal and raised concerns of an even weaker holiday shopping season.
Department stores, particularly those catering to luxury shoppers like Saks Inc, suffered the most in the month and many of the top chains cut their earnings forecasts.
Even discounters like Wal-Mart Stores Inc and warehouse clubs like BJ's Wholesale Club Inc fell short of Wall Street expectations, though they are still expected to benefit as cash-strapped consumers seek out their low prices.
Nearly 74 percent of retailers who reported same-store sales results on Wednesday missed expectations, based on reports from 20 companies, according to Thomson Reuters data.
"It's going to be a real tough holiday season, and I think that it's prudent of them to come out and lower expectations because nobody really knows what's going to happen in this environment," said John Langston, senior analyst at Hodges Fund.
Based on retailers who reported on Wednesday and estimates for others yet to post results, Thomson Reuters said overall same-store sales are on track to show a 1 percent rise, below its initial forecast of an overall increase of 1.5 percent.
The specialty apparel retailers due to report later on Wednesday and on Thursday are mostly expected to post declines in same-store sales.
Looking ahead, October sales are expected to increase 1.5 percent to 2.5 percent, with tough economic conditions persisting, the International Council of Shopping Centers said.
The gloomiest forecasts have predicted that holiday sales could be the weakest in up to 17 years.
The Standard & Poor's Retail Index was up half a percent in afternoon trading, performing in line with the wider market. Wal-Mart rose 1.7 percent, while Saks fell 12 percent.
A TURNING POINT?
For months, consumers have sought deals for staples such as food and fuel, as they have battled higher prices, a housing market slump, job losses and a credit crunch.
Many balked even more at spending in September as the financial crisis deepened, with several big U.S. financial companies failing or accepting shotgun buyouts.
"Nobody knows how much worse the economy is going to get," said Morningstar analyst Joseph Beaulieu.
Coordinated interest rate cuts from global banks added to volatile trading in the sector on Wednesday. Still, shares of discounters and warehouse clubs did not suffer as much, indicating that some investors may consider them a better bet. Continued...
