US retail sales weather the storms in October
US retailers have yet to weigh up the full impact of Hurricane Sandy, which hit the US East coast earlier this week between the back-to-school spending rush and the all-important shopping fest that lies ahead.
Indeed, despite estimates that US retailers were forced to close up to 10% of their stores as the Superstorm swept through, growth in US sales held up in October according to monthly figures released yesterday (1 November).
The International Council of Shopping Centers (ICSC) said US chains posted a "healthy" 5.0% same-store sales gain in the month - compared with a 3.9% rise in September and 4.1% in October last year.
"Hurricane Sandy impacts were modest in October for overall industry," said Michael Niemira, vice president of research and chief economist for ICSC, adding: "Easier comparison with October 2011 than with September results was helpful."
US retailers who seem to be on a roll include upscale department store operator Nordstrom, which booked a 9.8% jump in same-store sales, and off-price retailer TJX, which saw gains of 7%. Kohl's beat estimates with a 3.3% rise.
Macy's, which posted a 4.1% rise, lifted its second-half sales outlook despite the interruption caused by Hurricane Sandy. "The company is confident that we can make up some or most of the lost sales through the remainder of the quarter," said chief executive Terry Lundgren.
Elsewhere, despite a 4% rise in comparable sales thanks to continued momentum at its North American brands, Gap Inc failed to meet projections, while a rise of 3% at Limited Brands, owner of the Victoria's Secret chain, also fell short.
And while Target Corporation missed estimates with its 2.4% rise in October comparable-store sales, the discounter stayed positive. "We feel good about our holiday season merchandising and marketing plans," a statement said.
This year's holiday season, which kicks off in just a few weeks' time, already carried more uncertainties than usual - including the presidential election on 6 November, and the looming fiscal cliff of $500bn in automatic spending cuts to the federal budget and tax increases slated for 1 January 2013.
Add Hurricane Sandy to the mix, and it's easy to see why retailers will be keen to recapture any lost sales.
While November should offer a clearer picture of the storm's aftermath, questions remain on the amount of discretionary income that will be diverted away from holiday spending towards rebuilding.
But the ICSC is also optimistic that some replacement demand will kick in - as well as holiday purchases as the crucial festive season nears.
Ken Perkins, president of Retail Metrics, believes the fact the storm "hit well before Black Friday allows retailers plenty of time ahead of this key holiday selling weekend to prepare and add additional promotions if need be to garner lost sales.
"Had the storm occurred right in front of Black Friday, the impact would have been far more deleterious to retailers."
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