Friday, October 8, 2004

Tepid Sept. retail sales harbinger of Christmas?

By Anne D'Innocenzio
The Associated Press

NEW YORK - The outlook for the holiday shopping season grew more uncertain Thursday as the nation's largest retailers reported they had a fourth straight month of tepid sales in September.

High gasoline prices and grocery bills and ongoing job insecurity prompted many consumers to again limit their spending. The disappointing results came from retailers across the industry, including Wal-Mart Stores Inc., Gap Inc., Federated Department Stores Inc., and J.C. Penney Co. Inc.

Federated reported flat September sales on Thursday because of hurricanes Jeanne and Frances, which slammed through the southern United States last month and brought the Cincinnati-based company a $30 million revenue skid.

The parent of Bloomingdales and Lazarus-Macy's said sales in September on a same-store basis were up by .1 percent to $1.349 billion.

Chief executive Terry Lundgren estimated that October same-store sales would rise by 2-3 percent.

The company also revised its annual earnings guidance because of storms to $3.65 to $3.75 a share, instead of prior guidance at $3.70 to $3.80 per share.

"There's definitely some anxiety out there on the part of consumers," said Ken Perkins, a research analyst at RetailMetrics LLC, a research firm in Cambridge, Mass.

Low- and middle-income Americans in particular have been forced to cut spending on clothing and other non-necessities as gas and food prices rise. They're also nervous about jobs - last week, the Conference Board reported that job worries helped push consumer confidence down in September for the second month in a row.

Retailers also attributed the lackluster sales to the hurricanes that ravaged Florida and the Southeast in late August and the first half of September, forcing many stores to close. Some merchants reported unseasonably warm weather in the Midwest and elsewhere curbed sales of fall merchandise.

The International Council of Shopping Centers-UBS sales tally of 71 retailers was up 2.4 percent, slightly better than the 2 percent increase that was forecast. The results were higher than the 1.3 percent gain in August, but well off the average 6 percent increase of January through May. The tally is based on what the industry calls same-store sales, or sales at stores opened at least a year. They are considered the best indicator of a retailer's performance.

The disappointing sales streak left retailers concerned about the holiday season, when many stores hope to bring in as much as half their annual sales. Even a minor downward adjustment in spending by each household can add up to billions in lost business for retailers.

John Morris, senior retail analyst at Harris Nesbitt, noted that Thursday's results send "mixed messages across the landscape of the mall" on how the holiday season will fare.

"There are some positive reads for teens, cautious reads for the women's adult apparel," he added. "Upscale retailers are holding their own, but it is anyone's guess how much longer that echelon can be insulated from signs of a consumer slowdown."

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