217
Fashion Jobs
Ads
By
Reuters
Published
Oct 8, 2008
Reading time
3 minutes
Download
Download the article
Print
Text size

September sales disappoint, some forecasts cut

By
Reuters
Published
Oct 8, 2008


By Aarthi Sivaraman

NEW YORK (Reuters) - Retailers, from Wal-Mart Stores Inc to department stores, posted disappointing September sales as an expanding global financial crisis prompted shoppers to be even more thrifty.

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.

They included discounters like Wal-Mart and warehouse clubs like BJ's Wholesale Club Inc , though such stores are still expected to benefit from a shift by cash-strapped consumers to their low prices.

Department stores and apparel retailers were among the worst hit, particularly upscale names like Saks Inc . Several leading chains cut earnings forecasts ahead of the critical holiday sales season.

"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 the Hodges Fund.

Shares of Wal-Mart rose 2.5 percent while Saks slipped 8.3 percent in early trading.

For months, consumers have sought deals for staples such as food and fuel, as they 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 firms failing or accepting shotgun buyouts.

During the month, shoppers largely preferred discounters like Wal-Mart and warehouse clubs such as Costco Wholesale Corp and BJ's for necessities though sales at those retailers came in below expectations.

Wal-Mart posted a 2.4 percent increase in September sales at stores open at least one year. Analysts expected a 2.5 percent increase, according to Thomson Reuters Estimates.

Wal-Mart, the world's largest retailer, stood by its third-quarter profit forecast calling for earnings of 73 cents to 76 cents per share from continuing operations.

Its rival Target Corp posted a worse-than-expected decline of 3 percent in same-store sales. Target warned that its third-quarter earnings could miss the median estimate of 52 cents per share.

DEPARTMENT STORES LANGUISH

Costco Wholesale Corp posted a 7 percent jump in same-store sales while rival BJ's posted a rise of 10.4 percent. Both companies missed expectations.

Overall, U.S. retailers were expected to post a rise of 1.5 percent in monthly same-store sales, slightly above the 1.4 percent rise a year ago, according to Thomson Reuters data.

Department stores continued to suffer, as consumers shunned discretionary items such as clothes and accessories, forcing the retailers to cut their earnings or sales forecasts.

Same-store sales at J.C. Penney fell 12.4 percent, worse than the 9.9 percent drop analysts expected.

Citing weaker sales trends, Penney cut its third-quarter earnings and sales forecasts.

Not even upscale stores were spared. Same-store sales fell more than expected at Saks and Nordstrom Inc , signaling that economic worries were taking a toll on affluent shoppers.

Saks cut its same-store sales outlook for the second half of the year to below its previous outlook of a flat to low-single digit decline, while Nordstrom cut its third-quarter forecast to 32 cents to 37 cents per share, below its previous guidance of 49 cents to 54 cents per share.

Same-store sales at Pacific Sunwear of California Inc fell 5 percent, better than the analysts' target. But it expects third-quarter earnings at the low end of its forecast for nil to 5 cents a share as it had to mark down more of its clothing.

Same-store sales fell 7.5 percent at Wet Seal Inc , and were flat at Children's Place Retail Stores Inc -- both worse than anticipated.

Nordstrom shares fell 1.3 percent to $21.60 and Penney lost 1.1 percent to $28.22, while Target gained 2.8 percent to $40.97.

(See here for SHOP TALK -- Reuters' retail and consumer blog)

(Additional reporting by Nicole Maestri; editing by Jeffrey Benkoe, Dave Zimmerman)

© Thomson Reuters 2024 All rights reserved.