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US Retail Sales In September Reflect Issues With DC Stalemate
A group of nine U.S. retailers, excluding drugstores, reported a 0.4 percent rise in September same-store sales, lower than the 3.1 percent growth analysts had expected, the Thomson Reuters same-store sales index showed.
Several apparel stores posted disappointing numbers.
Gap Inc (GPS.N) said overall sales at stores open at least a year fell 3 percent, with declines at its namesake chain, Banana Republic and Old Navy, and the clothier blamed growing economic uncertainty. Analysts expected comparable sales to rise 1.6 percent. Gap shares fell 4.2 percent in afterhours trading.
L Brands Inc’s (LTD.N) same-store sales grew 1 percent, missing Wall Street estimates of a 2 percent gain. At its Victoria’s Secret chain, it had to offer deeper promotions than it had expected, especially in its teen-oriented Pink brand.
Same-store sales at Zumiez Inc (ZUMZ.O), The Buckle Inc (BKE.N) and American Apparel Inc (APP.A) all fell last month, continuing a tough stretch for stores that cater to younger shoppers.
“The consumer is still buying but it’s still the same story: the high end is holding up better than the lower end, where shoppers are more affected by different factors,” said Michael Niemira, chief economist of the International Council of Shopping Centers, which projects same-store sales to rise about 4 percent in October.
Shoppers were lured by deals.
On Wednesday, warehouse chain Costco Wholesale Corp (COST.O) reported U.S. same-store sales that beat Wall Street expectations, as consumers sought out its less expensive merchandise and gasoline.
Fred’s Inc (FRED.O), a discount general merchandise chain, reported better-than-expected sales, and Stein Mart Inc (SMRT.O), which sells fashions at big discounts compared to department stores, reported a 5 percent increase.
During the summer, many shoppers shifted spending to items like cars and homes and away from clothes, hurting retailers that have a heavy presence in malls, such as the teen-focused retailers and department stores.
J.C. Penney Co Inc (JCP.N), which this week reported a 4 percent drop in comparable sales for September but is not part of the same-store sales index, said traffic trends at its mall stores remained “difficult.”
Gap said in a recording that traffic deteriorated as September wore on.
Shares in L Brands, which forecast October same-store sales would rise by a low single-digit percentage, fell 4.1 percent.
‘WE WILL FEEL IT’
Consumer confidence dropped in September on concerns about the short-term outlook for jobs and whether a slight improvement in the economy would keep its momentum, according to the U.S. Conference Board.
In September, consumers were also worried about the prospect of a partial U.S. government shutdown. Those concerns were realized on October 1 and the closure is now in its tenth day.
U.S. business leaders have expressed concern about the impact of the political deadlock, especially with the holiday season looming. Indeed, if the U.S. debt ceiling is not raised by an October 17 deadline, the United States - the world’s biggest borrower - could default on some debt, with ramifications for markets and economies domestic and worldwide.
“If and when there’s a default, we will feel that,” Macy’s Inc (M.N) Chief Executive Terry Lundgren said at a conference in New York last week.
U.S. Treasury Secretary Jack Lew said on Thursday the gridlock in Washington was hurting the U.S. economy and urged Congress to raise a cap on government borrowing to keep America from defaulting on its debt.
Later, Republicans in the House of Representatives unveiled a plan that would avert a looming U.S. default.
Last week, Rite Aid Corp (RAD.N) reported comparable sales of general merchandise fell 0.5 percent, while at Walgreen Co (WAG.N) they rose 2.9 percent. Both chains get the bulk of their revenue from drug prescriptions.
Including these two drugstore chains, Thomson Reuters same-store sales index rose 2.4 percent, less than the 4.5 percent forecast by analysts.
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