Just Before Holiday Season, Retail Sales Decline Sharply
Just ahead of the crucial holiday shopping season, most of the nation’s retailers reported double-digit declines in October sales on Thursday, underscoring how the financial turmoil has touched all stores, be they discount or luxury.
The declines follow a weak September and foretell a holiday shopping season that many are characterizing as grim at best. Consumer spending over all fell 3.1 percent in the third quarter, its first decline in 17 years and the steepest fall since 1980. And the news is not likely to improve soon. On Friday, the Labor Department is expected to report that employers cut hundreds of thousands more jobs last month.
Among retailers, the luxury department store chain Neiman Marcus reported the deepest drop in sales at stores open at least a year, a crucial indicator also known as same-store sales.
October sales in Neiman’s specialty retail segment, which includes Neiman Marcus Stores and Bergdorf Goodman, were down 27.6 percent, in contrast to an increase of 7.8 percent a year ago.
Burton M. Tannsky, Neiman’s chairman and chief executive, said he expected that demand would “remain weak for an extended period of time” as affluent consumers cope with stock market volatility.
Other significant falloffs came from Abercrombie & Fitch (down 20 percent compared with a same-store sales decrease of 2 percent a year ago); the Gap (down 16 percent compared with a same-store sales decline of 8 percent a year ago); and Nordstrom (down 15.7 percent compared with a same-stores sales dip of 2.4 percent a year ago).
Several others, including Chico’s, J.C. Penney, American Eagle, Zumiez, Bon-Ton, Stein Mart and Pacific Sunwear, also suffered double-digit declines.
Even some discount retail chains — the one group that had been managing to tread water amid the economic slowdown — reported declines.
At Costco, the discount warehouse, October sales fell 1 percent compared with a 9 percent increase for the period a year ago.
Sales at Big Lots fell 0.2 percent, and Target sales dropped 4.8 percent. Off-price retailers that include Ross Stores, T.J. Maxx and Kohl’s also had declines.
“We’re starting to see the chinks in the armor of the value-oriented players who compete more on the basis of price,” John Morris, a retail analyst with Wachovia, said.
Still, the few retailers that had same-store sales increases are known for low prices: Wal-Mart, BJ’s Wholesale Club, Children’s Place and Aeropostale.
October same-store sales at Wal-Mart, the nation’s largest retailer, increased by 2.4 percent, not including fuel, compared with a 0.4 percent increase for the same period a year ago. Analysts had expected a 1.6 percent gain.
Battered retailers essentially threw up their hands. Many revised or withdrew earnings guidance altogether. Macy’s suddenly resumed reporting its same-store sales figures, even though it had a same-store sales decline of 6.3 percent.
Overall, the industry’s sales numbers highlight the consumer freeze on discretionary spending, with Wal-Mart bucking the trend in large part because of its low prices on basic items.