Published January 13, 2015
Consumers struggling with higher gasoline prices and the economic fallout from Hurricane Katrina shopped for basics at discounters and avoided mall-based apparel stores in September, delivering many retailers tepid sales results. Unusually warm weather also curtailed demand for fall clothing.
As retailers began reporting their monthly sales figures Thursday, discounters including Wal-Mart Stores Inc. (WMT) posted strong numbers, helped in part by increased demand of supplies like bottled water and batteries as shoppers dealt with the physical and emotional aftermath of Katrina and Hurricane Rita. But many mall-based apparel retailers, including Limited Brands Inc. (LTD) and Talbots Inc. (TLB), suffered.
"It is still early, but consumers were spending on essential items in September, and were foregoing nonessential purchases, " said Ken Perkins, president of RetailMetrics LLC, a research firm in Swampscott, Mass.
Consumers who were already juggling their budgets due to the higher cost of gasoline had to contend last month with prices that soared past $3 a gallon. And the two hurricanes, particularly Katrina, have led to hundreds of thousands of job losses, making people across the country uneasy about the economy.
Last week, The Conference Board (search) reported that consumer confidence suffered its biggest drop in 15 years in September. There have also been fresh government data pointing to a slowing economy.
Wal-Mart, which had seen its sales slow amid higher gasoline prices for months, had an easier time in September, its business boosted by increased demand for emergency supplies. The world's largest retailer had a 3.8 percent increase in same-store sales, or sales at stores open at least a year; the results matched Wall Street estimates. Total sales rose 9.7 percent.
Costco Wholesale Corp. (COST) had an 11 percent increase in same-store sales, helped by the rise in gasoline prices. Excluding the effects of gasoline price inflation, same-store sales would have been up 8 percent. Analysts had expected a 6.7 percent gain. Total sales rose 13 percent.
Even Nordstrom Inc. (JWN), which typically has robust sales, reported more modest results. It posted a same-store sales increase of 4.1 percent, below the 4.4 percent estimate. Total sales rose 6.4 percent.
Talbots suffered a 5.1 percent drop in same-store sales, far below the 2.3 percent gain Wall Street expected. Total sales rose 1 percent.
"Our September comparable store sales results were significantly impacted by a decline in customer traffic in both our core misses and kids business, particularly during the fourth week of the month," said Arnold B. Zetcher, chairman, president and CEO of Talbots, in a statement.
Limited Brands (LTD) had a 2 percent decline in same-store sales, matching Wall Street estimates. Total sales rose 1 percent.
Teen retailers had a mixed performance.
Hot Topic, Inc. (HOTT) struggled with a 5.6 percent decline in same-store sales, better than the 6.4 percent drop analysts expected. Total sales rose 8 percent.
Bebe Stores Inc. posted a same-store sales gain of 12.3 percent, matching Wall Street estimates. Total sales rose 21.5 percent.
American Eagle Outfitters Inc. (AEOS) reported on Wednesday a 13 percent increase in same-store sales for September, surpassing the 10.7 percent estimate. Total sales rose 20.9 percent.