Wal-Mart Stores Inc. and Costco Wholesale Corp. reported November sales that topped analysts’ estimates, while Target Corp. and J.C. Penney Co. trailed forecasts in what may be the slowest holiday shopping season in five years.
Wal-Mart, the world’s largest retailer, said sales at stores open at least a year advanced 1.5 percent, while Costco had a 9 percent increase. Sales gains at Target and J.C. Penney on the day after Thanksgiving, known as Black Friday, were overshadowed by the rest of the month.
Shoppers lined up before dawn on Black Friday at Wal-Mart, Best Buy Co. and department stores to snap up discounts of 50 percent or more on car-navigation systems, laptop computers and sweaters. Retailers may feel pressure to slash prices further this month and next as consumers struggle with defaults on mortgages and higher energy and food costs.
“Apart from Black Friday, this month was a continuation of mediocre results,” said Eric Beder, a retail analyst at Brean Murray Carret & Co. in New York. “In December, we're going to see this game of chicken where consumers wait for the last minute to try to get the biggest discounts.”
The National Retail Federation projects November and December sales to rise 4 percent, the smallest gain since 2002. That year sales added 1.3 percent.
Fifty-two percent of retailers beat expectations in November, about the average rate, Retail Metrics LLC said. Some department stores were helped by a shift that moved a week of holiday shopping to November from December, according to the Swampscott, Massachusetts-based research firm
November sales at U.S. retailers climbed 3.5 percent, the International Council of Shopping Centers said today, beating its estimate of 2.5 percent. Sales, based on results from 46 chains, were helped by the calendar shift, said ICSC Chief Economist Michael Niemira.
This month’s sales may climb 1.5 percent because “what you gain in November, you lose for December,” Niemira said. He reaffirmed the ICSC forecast for a combined November-December gain of 2.5 percent, which would be the slowest since 2004.
Wal-Mart’s sales were within its forecast for no change to a gain of as much as 2 percent. Results exceeded the estimate for an increase of 1.2 percent from an analyst survey by Retail Metrics and were helped by food and pharmacy sales. The Bentonville, Arkansas-based retailer expects December same-store sales to advance 1 percent to 3 percent.
There are just two holiday shopping weekends left before Christmas Day.
Results at Costco, the biggest U.S. warehouse club chain, topped the analyst estimate for a gain of 6.1 percent, according to Retail Metrics. BJ's Wholesale Club Inc. and TJX Cos., whose Marshalls and T.J. Maxx chains sell designer clothes at a discount, also posted sales gains that exceeded estimates.
“The strong performance at off-price retailers and warehouse clubs suggests consumers are trading down in the face of economic pressure,” said Retail Metrics head Ken Perkins.
November sales at Target, the second-largest discount chain, rose 1 percent, trailing its forecast for a gain of 2 percent to 4 percent. Both numbers are adjusted for the calendar shift.
The retailer needs to “meaningfully improve” in December to achieve fourth-quarter profit growth, Target said today.
J.C. Penney, the third-largest department-store chain, said the shift in November will have a “negative impact” on December and January sales. December comparable-store sales may decrease in the “mid-single digits” on a percentage basis, the retailer said.
“Prices are really now the lure retailers are using,” said Marshal Cohen, chief industry analyst at NPD Group Inc., a research firm based in Port Washington, New York. “Consumers are looking and cherry-picking which deals they want.”
Shoppers spent 3.5 percent less per person over the Thanksgiving weekend than in 2006, the Washington-based National Retail Federation reported. Black Friday is considered the unofficial start to the holiday shopping season and is one of the busiest days for retailers.
Consumer confidence dropped in November to the lowest level since the aftermath of Hurricane Katrina in 2005, according to the New York-based Conference Board.
The number of Americans who fell behind on their mortgage payments rose to a 20-year high in the third quarter as borrowers were unable to refinance or sell their homes, the Mortgage Bankers Association reported today.
— Bloomberg News