U.S. retailers posted November same-store sales that trailed analysts’ estimates as superstorm Sandy depressed traffic early in the month, overwhelming gains from the start of holiday shopping.
Sales at Macy’s Inc. (M), the second-biggest U.S. department-store company, fell 0.7 percent, compared with the average projection for a 2.5 percent gain from analysts surveyed by researcher Retail Metrics Inc. Kohl’s Corp. (KSS), the Menomonee Falls, Wisconsin-based department-store chain, said same-store sales fell 5.6 percent, trailing estimates for a 2.1 percent gain, spurring its biggest stock decline in two decades.
Sandy, which may have caused $50 billion in damage, closed stores and cut spending in the Northeast after making landfall Oct. 29. The storm may have trimmed 1 percent to 2 percent from November sales, which usually benefit from promotions the weekend after Thanksgiving, Erika Maschmeyer, a Robert W. Baird & Co. analyst in Chicago, said in a note before the report.
“November is critical, and the fact that it had these really devastating back-to-back weather events at the beginning means it may be tough to make up for those missed days in a heavily populated part of the country,” Alison Paul, who leads the retail group at Deloitte LLP in Chicago, said today in a telephone interview.
Same-store sales for the more than 20 companies tracked by Swampscott, Massachusetts-based Retail Metrics rose 1.6 percent, excluding drugstores, trailing the estimate for a 3.5 percent gain, the firm said today. That follows a 5 percent increase in October.
Sandy’s impact elevates the importance of December, which historically provides about half of fourth-quarter sales, Matthew Boss, an analyst at JPMorgan Chase & Co. in New York, wrote in a note today. Two more shopping days than last year and cooler weather will help boost sales, he wrote.
Shoppers spent $59.1 billion in stores and online in the four days starting Nov. 22, 13 percent more than last year, as retailers started deals on Thanksgiving and earlier, according to the National Retail Federation. That follows a 16 percent increase in 2011.
The U.S. economy grew at a 2.7 percent annual rate in the third quarter, more than previously estimated, revised figures from the Commerce Department showed today in Washington. The Bloomberg Consumer Comfort Index rose to minus 33 in the week ended Nov. 25, the highest level since April, from minus 33.9 the previous week.
Household purchases in the quarter climbed at a 1.4 percent rate, the least in more than a year and down from a previously reported 2 percent rate.
Strong momentum from the Thanksgiving weekend “may be tough to maintain with the drumbeat of bad news coming out of Washington, the controversy around the fiscal cliff and people being uncertain with what’s going to happen with taxes,” Paul said. “Retailers are going to have to redouble their efforts to continue to build excitement through the holiday season.”
Retailers’ fourth quarter, which ends in January, is typically their most important, accounting for about 20 percent to 30 percent of annual sales at many companies.
Macy’s, based in Cincinnati, fell 4.3 percent to $38.62 at the close in New York after reporting its first same-store sales decline in at least three years.
Kohl’s dropped 12 percent to $45.02, the biggest one-day decline since the retailer’s initial public offering in May 1992. It had the biggest loss in the Standard & Poor’s 500 Index today.
“Despite the largest-volume Thanksgiving weekend in our company’s history, we were not able to overcome the weak start to the month, which included the disruption of Hurricane Sandy,” Macy’s Chief Executive Officer Terry Lundgren said in a statement today. “Yet we remain on track to deliver a very strong sales performance in the fourth quarter, consistent with our guidance.”
Target Corp. (TGT), the second-largest U.S. discount chain, posted a 1 percent decline in same-store sales, missing the estimate for a 2.1 percent increase. The company in a statement cited “weaker-than-planned” sales in the first two weeks of the month.
Most chains count locations open at least a year to tabulate same-store sales. The revenue is a key indicator of a retailer’s growth because new and closed sites are excluded.
Along with Sandy, the U.S. election at the beginning of the month proved a drag as a flood of political advertisements squeezed out retailers’ ads and potentially reduced traffic, according to Jason Buechel, a senior executive in the retail practice of Dublin-based consultant Accenture Plc. (ACN)
Gap Inc., the biggest U.S. specialty-apparel company, fell 4.1 percent to $34.36, the biggest one-day decline since June 1, after reporting same-store sales rose 3 percent in November. Analysts estimated a 3.8 percent increase. The San Francisco-based company posted the biggest increase at its namesake brand in North America, and the smallest at Old Navy in the same region.
Limited Brands Inc., the operator of the Victoria’s Secret lingerie chain, reported comparable sales rose 5 percent in the month, topping projections for a 3.4 percent gain. December sales may increase in the “low-single digits,” the company said on a call today. The Columbus, Ohio-based company said Sandy reduced its November comparable-store sales growth by as much as 2 percentage points. The shares rose 1.6 percent to $51.58.
After the warmest Thanksgiving Day in the U.S. since 1998, temperatures cooled down throughout the weekend in much of the country, according to weather-data provider Planalytics Inc. Snow from a nor’easter after Sandy and a cool Black Friday weekend in major eastern markets helped drive sales of seasonal apparel, Scott Bernhardt, president of the Berwyn, Pennsylvania-based firm, said in a Nov. 26 note.
Sandy made landfall Oct. 29 near Atlantic City, New Jersey, and killed more than 100 people in 10 states. The worst damage was concentrated around New York City and the New Jersey coast, one of the most densely populated U.S. regions.
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