Strong retail sales raise holiday hopes
Written on October 9, 2009
U.S. retailers gave investors an early Christmas present, posting their first monthly sales increase in more than a year and suggesting that wounded consumers might begin to heal in time for the crucial holiday season.
Store chains that included Macy’s Inc, Abercrombie & Fitch and Kohl’s Corp surprised Wall Street on Thursday with better-than-expected September sales.
The Standard & Poor’s Retail Index rose 1.6 percent, with shares of Macy’s up 2.9 percent and Abercrombie rising 6 percent.
Based on 30 retailers, sales at stores open at least a year climbed 0.6 percent, compared with expectations for a 1.1 percent decline, according to Thomson Reuters data. Nearly 80 percent of the companies beat expectations.
The last time sales rose was in August 2008, when retailers notched a 0.2 percent gain. That was just before a financial collapse in September constricted credit worldwide and sent jobless rates climbing.
Retail experts cautioned that the sales results did not yet presage a consumer-driven recovery to the U.S. economy.
“You need to see sales coming through, margins holding and overall profit rising,” said Michael Niemira, chief economist of the International Council of Shopping Centers. “That overall story needs to play out for retail recovery to be solid.”
The ICSC said October same-store sales should be about flat with a year earlier, when retailers averaged a 4 cash advances pay day loan.1 percent drop, according to Thomson Reuters data.
One factor in the higher September sales was an easier comparison with previous results. Same-store sales fell 0.9 percent in September 2008, according to Thomson Reuters data.
“We only get better or stronger from here, given the weak comparisons with a year ago,” Niemira said.
This year’s later Labor Day holiday pushed a good chunk of sales from August into September, but analysts had wondered if rising unemployment would weigh more heavily on spending.
On Thursday, a Labor Department report showed new U.S. jobless claims hit a nine-month low, suggesting the employment market was healing despite a September setback.
BACK-TO-SCHOOL, LATE LABOR DAY HELP SALES
Sales of clothing for the back-to-school season fueled many retailers’ performances, especially in the early part of the month.
Several chains raised their profit forecasts for the current quarter, although Target Corp said it still had a cautious view of its fiscal fourth quarter, which includes the holiday season.
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