Chain retailers reported a sales gain of just 1.7 percent in September, according to the International Council of Shopping Centers.
The news suggests that it will be a difficult autumn for retailers and that deep discounting will occur well before the holiday season kicks in.
More than a dozen retailers, from Nordstrom Inc. (Seattle) on the high end to Target Corp. (Minneapolis) on the discount side, cut their earnings forecast for the final three months of the year.
Retailers blamed several factors for the downturn: a tight credit market, a poor housing market, unseasonably warm weather and a strong showing in September 2006, which made this year’s performance lackluster by comparison.
The holiday season is now expected to produce the slowest growth rate since 2002.
Nordstrom president Blake Nordstrom warned that the chain’s bulging inventories would hurt profits for the rest of the year. “We did not achieve our plan,” he said.
Wal-Mart Stores Inc. (Bentonville, Ark.) was one of the retailers that raised its profit forecast for the rest of the year on the expectation that cost-cutting would bolster sales. Though the discount chain’s September sales gain of 1.4 percent in September was below its expectations, it has already begun cutting toy prices to drum up business for the holiday season.
Target posted a disappointing 1.2 percent sales increase. Sales fell 7 percent at Dillard’s Inc. (Little Rock, Ark.), 4.6 percent at J. C. Penney Co. Inc. (Plano, Texas), 3.2 percent at Kohl’s Corp. (Menomonee Falls, Wis.) and 2.7 percent at Macy’s Inc. (Cincinnati).
Macy’s ceo Terry Lundgren said the company faced tough comparisons with last September ,when it renamed 400 former May department stores as Macy’s and introduced an intense marketing campaign to win over shoppers.
In the specialty segment, sales fell 7 percent at Gap Inc. (San Francisco), 4 percent at Abercrombie & Fitch (New Albany, Ohio) and 2 percent at American Eagle Outfitters Inc. (Pittsburgh). And furniture sales were down 0.6 percent, hurt by the steep slump in home sales.
On the plus side, Ann Taylor Corp. (New York) reported a modest 0.5 percent sales gain and at Aéropostale Inc. (New York), sales rose 1.3 percent. Also, grocery, consumer electronics and appliance sales were relatively strong.
In public statements, Wal-Mart warned that “customers remain concerned about their finances, especially the cost of living.” Penney ceo Myron Ullman described “well-chronicled issues affecting the housing market.”
In the meantime, a survey by The NPD Group Inc. (Port Washington, N.Y.) said many Americans plan to wait until after Thanksgiving to buy gifts. “I spotted the first holiday set-up in a store on August 18 this year, nearly a month earlier than last year,” said NPD chief retail analysts Marshal Cohen. “Retailers are looking to start the season earlier but consumers just aren't ready.” The report said 40 percent of consumers said they don't anticipate beginning their holiday shopping until after Thanksgiving. The good news: Only 5 percent said they would spend less over the next two months than they did last year.