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November sales mixed
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December 6, 2001: 11:18 a.m. ET
Discounters, warehouse clubs reap biggest gains; apparel retailers hurting.
By John Chartier
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NEW YORK (CNN/Money) - The nation's retailers reported mixed sales results in November, which marked the start of the holiday season, as consumers continued to be cautious with their money in the wake of a down economy and the Sept. 11 terrorist attacks.
Discount chains, warehouse clubs and moderately priced department stores reaped the biggest gains in the month, while more traditional department stores and specialty apparel shops continued to struggle.
Consumers have turned cautious as the U.S. economy slips into recession in the wake of the attacks. Though Americans apparently have money to spend in spite of massive layoffs in the past year, they have sharply tempered their spending out of uncertainty about job security and the economy.
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November sales show Americans are being more cautious with their holiday dollars (From CNN/Money) | |
"It's very mixed. When you get into an environment like this, the extremes get magnified -- the good do better and the struggling do worse. It's like quicksand," said Richard Baum, a retail analyst at Credit Suisse First Boston.
Analysts have pointed to warehouse clubs such as Costco and discount chains such as Wal-Mart Stores Inc. as likely to grab the biggest share of sales and profit this holiday season. Analysts project a 3 percent rise in November same-store sales.
Bentonville, Ark.-based Wal-Mart (WMT: down $0.88 to $55.69, Research, Estimates), a Dow component, reported a 4.5 percent same-store sales increase at its core Wal-Mart discount stores and a 3.3 percent rise at its Sam's Club warehouse operation.
But Gap Inc. (GPS: up $0.50 to $14.08, Research, Estimates), which has been plagued by unpopular fashions, saw its November same-store sales plummet 25 percent as the former top U.S. apparel retailer logged losses at all its divisions, which include Gap stores, Old Navy and Banana Republic.
The San Francisco-based company also warned that it now anticipates a fourth-quarter loss worse than the 6 cents a share loss it reported in the third quarter.
"November sales results significantly missed our expectations, primarily at Gap and Old Navy," Chief Financial Officer Heidi Kunz said.
Target Corp. (TGT: down $0.94 to $38.68, Research, Estimates), which operates the Target discount chain as well as the Mervyn's and Marshall Fields department stores, reported an 11.4 percent increase in November same-store sales, which was slightly below plan, CEO Bob Ulrich said.
Meanwhile J.C. Penney (JCP: down $0.86 to $24.89, Research, Estimates), in the midst of a turnaround, posted a 0.6 percent increase in sales at its core department stores and a 7.1 percent rise in sales at its Eckerd drugstore division, driven by sales of basic items such as baby-care products, food and household products. The Plano, Texas-based chain also said it remains comfortable with fourth-quarter earnings guidance of 30-35 cents a share.
Bargain-hunting consumers helped push Costco Wholesale Corp.'s (COST: down $1.02 to $42.46, Research, Estimates) November same-store sales up 4.4 percent. The company said slower tobacco sales, which faced tough comparisons with the previous month, shaved 1 percent off the November figure.
Sales at B.J.'s Wholesale Club Inc. (BJ: down $4.82 to $40.33, Research, Estimates) fell 0.3 percent in the month. The Natick, Mass.-based company cited unseasonably warm weather in the Northeast, which hurt sales of cold weather items such as snow tires, heaters, outerwear and snow-removal tools. Holiday decoration and giftware sales also slowed, the company said.
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Federated Department Stores (FD: down $0.84 to $37.16, Research, Estimates), the Cincinnati-based parent of Macy's and Bloomingdale's, reported a 0.9 percent increase in its November same-store sales, but said sales for the year to date were down 4.3 percent. A shift in the calendar that made for an earlier Thanksgiving contributed to the company's November sales increase, CEO James Zimmerman said, adding that he anticipates an 11 percent to 14 percent same-store sales decline in December and a 7 percent to 10 percent decline in the fourth quarter.
And May Department Stores Inc., (MAY: down $0.42 to $35.41, Research, Estimates) operator of the Lord & Taylor, Hecht's, Foley's and David's Bridal chains, logged a 0.6 percent decline in November same-store sales.
Best Buy Inc., (BBY: down $2.81 to $70.50, Research, Estimates) the No. 1 electronics retailer, reported a 1.6 percent increase in same-store sales and a 27 percent increase in net sales, thanks to revenue from recently opened stores and acquisitions. The company said it anticipates third-quarter earnings growth of more than 30 percent from a year ago.
However, Kmart Corp., (KM: down $0.27 to $5.99, Research, Estimates) the troubled discount chain that has been struggling to effect a massive turnaround amid increasing competition from Wal-Mart, reported a 2.6 percent drop in November same-store sales. The Troy, Mich.-based retailer cited scaled-back advertising and marketing plans for the holiday season.
And Sears Roebuck & Co. (S: down $0.46 to $45.85, Research, Estimates) posted a 1.3 percent decline in November same-store sales, yet CEO Alan Lacy said results were "slightly better than expected." Hoffman Estates, Ill.-based Sears is in the midst of a restructuring of its stores that includes more of an emphasis on home appliances and hardware and de-emphasizes apparel as it struggles with the slowing economy and fierce competition from companies such as Kohl's Corp. (KSS: up $0.11 to $71.51, Research, Estimates).
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Kohl's reported a whopping 25.9 percent jump in November same-store sales as the Menomonee Falls, Wis.-based department store benefited from the shift in the calendar this year that adds an extra week of sales. But analysts point to Kohl's strong management and tight cost controls that have helped the company continue to post strong sales and profits despite the slowing economy.
Specialty chains rang in with mostly lackluster results Thursday.
Electronics retailer Circuit City Stores Inc. (CC: up $1.71 to $20.40, Research, Estimates) reported a smaller-than-expected 4 percent decline in its same-store sales and said it expects to meet its expectations of a slight third quarter profit for the Circuit City business That business posted a loss of 34 cents a year earlier.
Analysts on average anticipate a profit of 3 cents a share, according to earnings tracker First Call.
said sales at its electronics stores open at least a year declined a smaller-than-expected 4 percent in the third quarter, and the results sent its shares up as much as 16 percent.
Youth-oriented apparel chain Abercrombie & Fitch (ANF: up $0.38 to $26.40, Research, Estimates) said November same-store sales fell 5 percent, while rival American Eagle Outfitters Inc. (AEOS: down $0.81 to $24.82, Research, Estimates) posted a 9.6 percent decline.
Additionally Pacific Sunwear of California Inc. (PSUN: up $0.24 to $18.77, Research, Estimates) reported a 2.3 percent same-store sales decline.
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When you get into an environment like this, the extremes get magnified -- the good do better and the struggling do worse.
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Richard Baum
Retail Analyst
Credit Suisse First Boston |
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Apparel retailer Limited Inc. (LTD: up $0.09 to $14.34, Research, Estimates), which operates the Express, Lerner New York Limited Stores, Structure and Henri Bendel chains, posted a 7 percent drop in its November same-store sales.
Intimate Brands (IBI: down $0.06 to $14.45, Research, Estimates), the operator of Victoria's Secret and Bath & Body Works that is majority-owned by Limited, posted a 6 percent drop in its sales.
Women's apparel chain AnnTaylor Stores Corp. (ANN: up $1.26 to $32.08, Research, Estimates) reported a 0.8 percent sales increase, but logged a 2.1 percent decline after adjusting sales to reflect the earlier Thanksgiving holiday.
And Talbots Inc. (TLB: up $0.09 to $34.60, Research, Estimates) reported a 12 percent drop in its same-store sales for November, which CEO Arnold Zetcher said was in line with the company's revised monthly sales plan in the face of a weak economy and tough sales comparisons with a year ago.
The company also confirmed its fourth-quarter earnings guidance of 52 cents to 54 cents a share.
Children's apparel chain Children's Place Retail Stores Inc. (PLCE: down $5.57 to $30.43, Research, Estimates) logged a 16 percent drop in same-store sales for November.
Sharper Image Corp. (SHRP: up $0.43 to $9.50, Research, Estimates) reported a 20 percent drop in November sales, citing difficult comparisons to a year ago when Razor scooters were hot sellers, and slowing sales since the Sept. 11 terrorist attacks. 
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