Consumers still sold on retailers

[notiCIas]

Consumers still sold on retailers

Strong October sales numbers show public once again defied predictions of spending retreat.

November 3, 2005: 9:33 AM EST
By Parija Bhatnagar, CNN/Money staff writer



NEW YORK (CNN/Money) - Surprise! Surprise! Surprise!

That's three months in a row now that retailers have posted strong and -- in some cases -- stellar results despite predications that consumers spending would wilt because of gas price woes, turbulent weather and fears of inflated heating bills in the winter months.

Didn't happen in August, didn't happen in September, and it also did not happen last month.

"Consumers are gaining momentum despite all the headwinds," said Ken Perkins, retail analyst and president of research firm Retail Metrics.

"The apparel mix in stores looks solid. Cooler weather finally gave a boost to winter merchandise and a pullback in gas prices certainly helped," he said. "You have to wonder when the consumer will be tapped out because the negative savings rate."

Perkins said he's cautious about the first-quarter of next year. "This is when the sticker shock of home heating bills will come home to roost."

Retailers, with some exceptions, once again saw strong numbers, especially at specialty apparel stores, luxury sellers, discounters and warehouse clubs.

But, it was a mixed picture for department stores and home furnishing chains.

Wal-Mart, the No.1 retailer, delivered what it promised -- a 4.3 percent gain in same-store sales last month. Bentonville, Ark.-based Wal-Mart (Research) said food once again outpaced higher-margin general merchandise sales.

Total company sales rose $23.3 billion, up 10.5 percent from $21 billion for the same period a year earlier.

Comparable sales at its Sam's Club warehouse club rose 6.7 percent, faster than the 3.9 percent growth at its Wal-Mart stores.

However, the retailer said Sam's Club benefited from gasoline sales. Excluding gasoline sales, Sam's Club would have logged a 4.8 percent sales increase in October. Warehouse clubs including Sam's and Costco sell discounted gasoline at their stores.

For November, the company expects sales to increase between three to five percent.

Rival Target Corp. (Research) continued to outperform Wal-Mart. Its same-store sales increased 5.7 percent last month, beating analysts' expectations for a 4.7 percent rise.

Teen clothiers kept their leadership position with double-digit sales increases in October. Among the winners: American Eagle Outfitters (Research)' sales surged 17.3 percent; controversial Abercrombie & Fitch (Research) said their sales rocketed 31 percent last month and Pacific Sunwear (Research) reported an 8.8 percent increase in its sales.

Hot Topic (Research), the seller of Goth-inspired clothing, missed the party, posting a 5.7 percent sales decline. No. 1 apparel seller Gap Inc. (Research)also disappointed with a five percent drop in October sales.

Department store chain J.C. Penney (Research) reported same-store sales up 2.4 percent, beating analysts' forecasts for a 1.6 percent increase. Kohl's (Research) logged a solid 6.2 percent gain. Federated Department Stores (Research) saw a 0.7 percent sales decline, citing store closures due to Hurricane Wilma's impact in Florida.

Federated said total September and October sales include May department stores, which it acquired Aug. 30, while same-store sales reflect only Macy's and Bloomingdale's locations open for more than a full fiscal year.

Sales at home furnishings chain Pier 1 Imports (Research) plunged 10.4 percent, hurt in part by the discontinuation of the annual Friends and Family sales event.