As retailers began reporting monthly sales for January 2008, it became clear that this would be the weakest January performance in nearly four decades. Continuing the slump that was evident in the 2007 holiday shopping season, consumers continue to wrestle with high gas and food prices, a slumping housing market, an escalating credit crisis and a weakening job market. Among the details of the various January reports is that shoppers are buying mostly necessities with the gift cards they received for the holiday.
Wal-Mart Stores Inc. (Bentonville, Ark.) noted that gift card redemptions were below expectations and that customers appear to be holding gift cards longer and “using them more often for food and consumables rather than discretionary purchases.”
The New York Times noted that the disappointments cut across all sectors including discounters like Wal-Mart, teen retailers including Pacific Sunwear of California Inc. (Anaheim, Calif.) and mall-based apparel chains such as Limited Brands Inc. (Columbus, Ohio). Even affluent shoppers are pulling back, hurting stores like Nordstrom Inc. (Seattle).
The Times reported that the UBS-International Council of Shopping Centers preliminary sales tally of 43 retailers rose 0.5 percent in January, well below the original 1.5 percent forecast. The results followed an anemic 0.7 pace in December and were below last year's same-store sales average gain of 2.1 percent. Chief economist Michael Niemira said January's same-store sales performance was the weakest ever, according to records that go back to 1970.
Wal-Mart reported a 0.5 percent gain in same-store sales. Rival Target Corp. (Minneapolis) reported a 1.1 percent decline.
Within the department store sector, J.C. Penney Co. Inc. (Plano, Texas) had a 1.9 percent decline in same-store sales (though the results were better than the 6.3 percent drop Wall Street expected). Nordstrom suffered a 6.6 percent same-store sales decline, much worse than the 0.7 percent decrease expected. Macy's Inc. (Cincinnati) reported a 7.1 percent decline.
Kohl's Corp. (Menomonee Falls, Wis.) said same-store sales tumbled 8.3 percent. Dillard's Inc. (Little Rock, Ark.) fell 12 percent.
Saks Inc. (Birmingham, Ala.) said same-store sales rose 4.1 percent, better than the 2.2 percent estimate. But Saks said shoppers continue to shift more of their spending to sale merchandise amid a challenging economic environment.
Limited Brands reported an 8 percent drop in same-store sales in January, worse than the 6.9 percent forecast. Gap Inc. (San Francisco) posted a 2 percent decline in same-store sales, better than the 6.5 percent decline projected by analysts. Chico's FAS Inc. (Fort Myers, Fla.) said its same-store sales fell 22.1 percent, even as it aggressively marked down merchandise.
Among teen retailers, Abercrombie & Fitch Co. (New Albany, Ohio) had flat same-store sales. Pacific Sunwear suffered a 7.4 percent drop; analysts expected a 1.2 percent rise.
January same-store sales for The Wet Seal Inc. (Foothill Ranch, Calif.) fell 5.7 percent, as its Arden B chain continued to slump. The results were worse than the 1.5 percent decline expected by analysts.
One of the few bright spots: Costco Wholesale Corp. (Issaquah, Wash.) reported a 7 percent gain in same-store sales, surpassing a 6.6 percent estimate. Also, BJ's Wholesale Club Inc. (Natick, Mass.) said its January same-store sales rose 7.8 percent, helped by sales of gas and food.