US retail sales cool in October
Growth in US same-store sales appeared to cool in October as weather and economic malaise weighed on retailers, putting extra pressure on businesses as they transition into the crucial holiday season.
Indeed, sitting between the back-to-school spending rush and the all-important shopping fest that lies ahead, it is probably not surprising that the October sales growth slowed to 3.9%.
"Weather, pricing, and promotions all had some impact on October's same-store sales results," says Frank Badillo, senior economist at Kantar Retail. "The biggest drag on growth, however, has to be the belated impact of shoppers' intention to curb their spending in the coming months and into the holiday."
Its figures showed the sales-weighted composite for the 24 retailers reporting - most of them apparel and department store retailers - was weaker than the 5.7% same-store sales gain last month but stronger than the 1.7% gain in October of 2010.
A similar picture was painted by the International Council of Shopping Centers (ICSC), whose tally of US chain store retailers saw a year-on-year gain of 3.7% in October comp-store sales - the softest month since the 2.0% booked in March's.
Despite an easy comparison with October 2010 when sales edged up just 1.6%, it suggests sales have "hit a bump in the road" and asks: "Is this the start of new trend?"
Retailers themselves have put the blame on several factors, ranging from unseasonably warm weather curbing demand for winter apparel early in the month and a snowstorm in the north eastern US at the end of October keeping shoppers at home.
Macy's CEO Terry Lundgren said sales of cold-weather products such as coats, hats and sweaters "were soft for most of October as the weather stayed unseasonably warm, but they began to normalise once temperatures turned cooler.
"Ironically, sales were negatively impacted by the snowstorm in north east and mid-Atlantic states [on] the final sales day of the October period," he added.
Regional department-store chain Stage Stores Inc highlighted "economic pressure related to high unemployment and gas prices" for curbing demand from its customers who are "focused on price and value." CEO Andy Hall added: "Our operating environment continues to be very promotional."
But Kohl's said its results continued to be helped by the launch of the new Jennifer Lopez and Marc Anthony collections.
And Carol Meyrowitz, CEO of The TJX Companies - where same-store sales came in at the top of expectations - said "business in the US picked up nicely as the weather turned colder toward the end of the month."
With low October sales gains reflecting the continuing uncertainty of consumers, competition for holiday consumers this year looks set to be fierce.
The most important event in the sales calendar kicks off in just a few weeks - and efforts are already underway to try to woo the first shoppers. Target, Macy's, and Kohl's are all planning to open for the first time at midnight on Black Friday, the day after Thanksgiving.
And while the National Retail Federation has forecast a small 2.8% gain in US retail sales to $465.6bn during this year's holiday season, promotions, discounts and lean inventory levels are likely to remain key to separating the winners from the losers.
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