Skip to main content

The Globe and Mail

U.S. retailers post solid sales ahead of holiday rush

Costco shopping carts are shown at the entrance of Costco in Mountain View, Calif. in this file photo.

Paul Sakuma/AP

September sales at U.S. retailers looked solid, not stellar, on Thursday as shoppers finished up their back-to-school buying and put the brakes on more big spending before the holiday season.

Overall, sales were in line with expectations. Among the largest retailers, Costco Wholesale Corp. and apparel retailer Gap Inc. beat analysts' estimates, while department store chain Kohl's Corp. missed them.

The mixed sales results fit in with mixed economic data. Higher gasoline prices and uncertainty about the upcoming election may weigh on shoppers' minds, but consumer sentiment hit a four-month peak in September.

Story continues below advertisement

And a report out on Thursday showed that while the number of Americans filing new claims for unemployment benefits last week had risen less than expected, the jobless rate remained at about 8 per cent.

"I think a lot of people are holding their breath now waiting for an election, and a lot of it is going to be focused on the economy," said John Rooney, national retail & distribution sector lead for Deloitte Consulting. "Then you'll see that once it clears up, November should be good, and December should be good."

Sales at stores open at least a year at 17 chains tracked by Thomson Reuters I/B/E/S rose 3.6 per cent, matching analysts' expectations. In September 2011, such sales rose 6.4 per cent.

Results in the department store category were weaker than anticipated, despite a standout performance from small operator Stage Stores Inc. Same-store sales at apparel chains topped expectations.

The 3.6 per cent rise excludes the impact of an 11.1 per cent drop in same-store sales at Walgreen Co., which suffered from a now-resolved contract dispute.

The monthly sales reports give a snapshot of consumer spending, which accounts for about 70 per cent of the U.S. economy. But they offer a limited view, as Wal-Mart Stores Inc. and many other large retailers do not release monthly data. On Thursday, Target said it would stop reporting monthly sales next year.

The Standard & Poor's retailing index rose 0.6 per cent on Thursday, just ahead of the 0.5 per cent gain for the broad S&P 500. Among the retail stocks gaining were Nordstrom Inc and Costco, which were both up nearly 1 per cent. Losers included Kohl's, down 1.9 per cent.

Story continues below advertisement

Macy's Inc. and Nordstrom posted same-store sales increases that missed analysts' expectations, and the decline at Kohl's was steeper than anticipated.

Stage Stores posted the largest jump in same-store sales with an 11.1 per cent rise, beating expectations by the widest margin. The operator of chains such as Bealls and Goody's said back-to-school sales had been strong at the beginning of the month and that momentum had continued, resulting in "solid full-price selling."

Michael Niemira, chief economist at the International Council of Shopping Centers, said he did not necessarily read too much into the latest numbers, calling September "more of a reactionary month."

October could come in along the same lines as September or a bit stronger, with same-store sales up 3.5 per cent to 4.5 per cent, excluding drugstores, Niemira said.

Target said it expected its October same-store sales to rise in a low-to-mid single-digit percentage range, while Limited Brands Inc, parent of Victoria's Secret, forecast an increase in the low single digits.

This year, October could be a lighter month than usual for retailers, as the U.S. presidential debates and a heavy dose of political advertising take center stage.

Story continues below advertisement

"I don't think the holiday season will get off to as fast a start as possibly years past because the airwaves are going to be dominated with political ads," Rooney said. "It's going to be harder to get your message out as a retailer."

Heading into the holiday season, chains have been carefully controlling inventory levels and therefore may not have to resort to clearance sales.

Retailers are "focused on versatility and looking to stock stores with product that consumers can wear for multiple uses," said Catherine Moellering, executive vice president at Tobe, a retail and fashion consulting firm.

Still, there are discounts.

Carlos Escalera, a 29-year-old handyman from Harlem, said he and the people he knows were planning to spend more this year, but discounts remained a big draw.

"There are more sales now," Escalera said as he shopped for a hooded sweatshirt on Wednesday at the Macy's store in New York's Herald Square.

He is waiting for Black Friday in late November, the traditional start of the holiday season, for a big burst of shopping, he said, and then he plans to spend again right before Christmas.

"I'm not nervous," he said. "The economy is doing better."

Report an error
Comments

The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.

Discussion loading… ✨

Combined Shape Created with Sketch.

Combined Shape Created with Sketch.

Thank you!

You are now subscribed to the newsletter at

You can unsubscribe from this newsletter or Globe promotions at any time by clicking the link at the bottom of the newsletter, or by emailing us at privacy@globeandmail.com.