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Big retailers' sales rise
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November 4, 1999: 1:02 p.m. ET
October same-store sales gain at most chains, spark strong holiday outlook
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NEW YORK (CNNfn) - Sales at big retailers surged again in October as consumers flocked to both discount and higher-end stores, the store chains reported Thursday, prompting analysts to expect a strong Christmas shopping season ahead.
For a second straight month, most retailers posted significant sales gains from year-earlier levels, a reflection of consumer demand for all kinds of products, particularly appliances, electronic goods, discounted apparel and home furnishings, the stores said.
The figures match recent numbers released by the Commerce Department indicating retail sales remain strong and consumer demand for goods isn't slipping, even with two recent interest-rate increases from the Federal Reserve and a possible third on the way later this month.
Strong Christmas season seen
"Consumers in October continued on a buying spree, propelled by a very robust economy," said Kurt Barnard, president of Barnard's Retail Trend Report, a forecasting firm in Montclair, N.J. "Many came through with better figures than last year, even though last year the numbers were also very good."
The rate of gain has slowed from a year ago, prompting some suggestions that the consumer-spending boom is nearing an end. But even some of the doubters expect buying to stay strong through the holiday season.
"I think that is the kind of story we will see in the next few months, then a big drop-off after New Year's," Michael Niemira, a retail analyst at Bank of Tokoyo-Mitsubishi in New York, told the Associated Press.
But while Barnard and other analysts who see a strong retail economy believe there could be a fall-off sometime in the New Year, they are more bullish than Niemira on consumer spending going forward.
"I think the consumer is still alive and healthy," said Jeffrey B. Edelman, analyst at PaineWebber. "I think the weakness we saw was due largely to weather. I think it'll be a good Christmas season, up about 5 percent."
Barnard said overall same-store sales at major retailers increased about 5.5 percent in October, and he doesn't believe there will be any slowdown until at least the end of the first quarter of 2000.
"All our surveys and research have demonstrated that consumer spending is very slow in growing and contracting. It resists change," said Barnard. "We can expect this to last quite a while."
Wal-Mart leads the way
Leading the way last month was retail titan Wal-Mart Stores (WMT). The world's largest retailer said October sales at its stores open at least a year rose 6.2 percent, with total sales for the four-week period ended Oct. 29 up more than 25 percent. Sales of electronics and home furnishings led the way.
No. 2 retailer Kmart (KM) also reported strong same-store sales in October, with sales rising 3.7 percent from a year earlier; total sales were up 6.3 percent. Strong sales of home products such as kitchen appliances, electronics and home furnishings helped fuel sales at its 2,159 outlets.
Sears, Roebuck & Co. (S) posted a 4.7 percent gain in comparable domestic store sales, exceeding many expectations. The company said it had gains in appliances, home electronics and apparel.
"Sears is now giving evidence that its new marketing strategy and new slogan work very effectively," Barnard said.
Penney's core numbers off
J.C. Penney Co. (JCP), the fourth-biggest U.S. retailer, said October sales at its stores open at least a year rose 3.2 percent, led by a 10.2 percent gain in same-store sales at its Eckerd drugstore division. But sales of its core department store sector showed a 5.7 percent decline in same-store sales for the period, as the company continued a restructuring there. "Penney's did much worse than expected, but we still have a buy on the stock because of the restructuring," Edelman said.
Federated Department Stores Inc. (FD), parent company of Macy's, Bloomingdale's and other chains, posted a 5.3 percent gain in October same-store sales after registering a 4.7 percent increase in September.
Home furnishing specialty retailer Cost Plus Inc.'s (CPWM) same-store sales rose 8.2 percent. Among clothing chains, AnnTaylor Stores (ANN) surged 11.2 percent, Limited Inc. (LTD) sales rose 8 percent and Talbots Inc. (T) sales jumped 11.6 percent.
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