Many retailers report Sept. sales declines

October 8, 2009 7:27:39 AM PDT
A late Labor Day and delayed school openings offered some relief to merchants in September, helping to boost sales above Wall Street expectations. But spending still remains tepid as consumers focused on necessities amid job worries and tight credit. Still, most stores posted sales declines - though smaller than in recent months - even as their figures are compared with last September when business plummeted as the financial meltdown ballooned.

As stores announced their results Thursday, J.C. Penney Co., Macy's Inc., and teen retailer Wet Seal Inc. reported smaller-than-expected declines in sales at stores open at least a year. The measure is considered a key indicator of a retailer's health.

Limited Brands Inc., which runs Victoria's Secret and Bath & Body Works, and accessories chain The Buckle Inc. both posted increases for the month.

According to a preliminary tally by Thomson Reuters, nine stores beat Wall Street estimates, while four retailers' results missed expecations.

Industry worries remain high heading into the holiday shopping season because shoppers, who were afraid to buy a year ago, are now grappling with rising job losses, reduced hours or unavailable credit. The unemployment rate is now 9.8 percent, up from around 7 percent last holiday season.

Credit also remains tight. A report released Wednesday by the Federal Reserve, shows that consumers reduced their borrowing for the seventh straight month in August as households cut spending and banks reduced credit card limits.

"Consumers remain under pressure on multiple fronts," said Ken Perkins, president of retail research firm Retail Metrics. "I don't think consumer spending is going to see a substantial uptick. Shoppers are concerned about rebuilding their balance sheets."

In this climate, purveyors of fashion and nondiscretionary items continue to struggle with sluggish sales, while low-price stores benefit from shoppers switching to cheaper stores and brands.

Still, the tone was better in Thursday's reports, as several merchants including J.C. Penney, American Eagle Outfitters Inc. and TJX Cos. raising their profit outlook based on their better-than-expected performance.

Macy's had a 2.3 percent decline, less than the 4.6 percent drop that analysts surveyed by Thomson Reuters had projected. Penney had a 1.4 percent decline for September, lower than the 3.5 percent decline Wall Street estimated.

TJX enjoyed a 7 percent gain, surpassing the 4.1 percent estimate.

Gap Inc., dragged down by sluggish sales at its namesake stores and Banana Republic, posted a 1 percent sales decline, a bit worse than the 0.4 percent dip that analysts had expected. Its lower-price Old Navy division continued to shine, posting a 13 percent gain in sales at stores opened at least a year.

Limited Brands reported that sales in stores open at least a year rose 1 percent in September; that was better than the 2.4 percent slide that analysts had predicted.

Among teen retailers, American Eagle reported flat sales, beating estimates for a 4.1 percent decrease.

Buckle Inc. said its sales at stores open at least a year rose 5.1 percent, a bit lower than the 5.8 percent gain that Wall Street anticipated.

Wet Seal had a 4.5 percent decline, but analysts had expected a 7.8 percent drop for September.

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