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Holiday Retail Sales Forecast Further Dims

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The Associated Press

Published: November 9, 2007

NEW YORK - The outlook for the holiday shopping season grew bleaker Thursday after retailers announced disappointing October sales attributed to consumers' ongoing worries about housing and higher energy prices.

The downbeat news came from all sectors including mall-based apparel stores such as Limited Brands and department stores such as Macy's. Even upscale Nordstrom posted a rare sales decline, and Wal-Mart Stores posted sales below expectations despite its aggressive discounting heading into the holidays.

Warehouse club operators including Costco Wholesale and BJ's Wholesale Club were among the few standouts, a sign that consumers are searching for lower prices.

"Overall, the sales trend continues to slow," said Ken Perkins, president of RetailMetrics LLC, a research company in Swampscott, Mass. "I think the consumer is certainly feeling the economic pressure heading into the holidays."

Milder than normal weather also hurt sales, wiping out consumers' appetite for winter wear.

The International Council of Shopping Centers-UBS tally was up 1.6 percent in October, below the original 2.5 percent forecast, marking the slowest October pace since 1995. The tally is based on same-store sales, or sales at stores open at least a year, considered a key indicator of a retailer's health.

Wal-Mart posted a 0.4 percent gain in same-store sales, below the 1.1 percent gain expected by analysts polled by Thomson Financial. The results excluded fuel sales. Wal-Mart said sales of Halloween merchandise were solid across all departments, but seasonal categories related to cold weather including apparel and home furnishings were weak.

At the company's Sam's Club warehouse division, same-store sales rose 2.7 percent, excluding fuel. Including fuel, same-store sales rose 4.2 percent.

Rival Target Corp., which stumbled in September with disappointing results, fared well in October, posting a 4.1 percent gain in same-store sales, above the 2.5 percent forecast.
Costco had a 9 percent gain in same-store sales, well exceeding the 5.7 percent estimate. Still, results at the company, which sells gasoline at its warehouse stores, were inflated by an uptick in gas prices in October from a year ago. Excluding gas price inflation, sales would have been up 5 percent.

BJ's said food and gasoline sales drove its same-store sales 4.8 percent higher in October. Analysts had expected a 3.1 percent increase.

Among department stores, Nordstrom, which reported a weaker-than-expected 3.2 percent same-store sales gain in September, posted a 2.4 percent drop in October. Analysts expected a 1 percent gain.

Saks Inc., which operates Saks Fifth Avenue, posted a 10.6 percent gain in same-store sales, well exceeding the 5.4 percent estimate.

Macy's posted a 1.5 percent decline in same-store sales.

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