Holiday shoppers came out to spend in November
NEW YORK andamp;#8212; Generous discounts lured American to stores and online for holiday gifts in November, providing cheer and delivering the best gains for retailers in four years.That raises hopes, already buoyed by reports of crowded malls and early numbers, for a strong holiday shopping season and is an encouraging sign for the economic recovery.The International Council of Shopping Centers’ index reported a 5.8 percent gain, much better than the 3 to 4 percent increase expected.It marked the biggest increase since March when a quirk of the Easter calendar resulted in a 9 percent gain. Aside from that month, the last time retailers reported such a big increase was in September 2006, when it registered 6.2 percent increase.”All forces came together to yield a performance better than what we’ve seen in the last four years,” said Mike Niemira, chief economist at International Council of Shopping Centers. November’s sales results are being compared with weak spending over the last two years, but Niemira said that plenty of discounting along with what appears to be a sustained recovery is helping to boost spending.As retailers report their monthly results Thursday, they showed that many types of shoppers were in the mood to buy andamp;#8212; if the product and price were right. Stores reporting gains that topped Wall Street expectations included Costco Wholesale Corp., Target Corp., Victoria’s Secret and pricey teen retailer Abercrombie andamp; Fitch.At the malls and online over the crucial Thanksgiving weekend, many people were not only buying gifts for others but throwing in items for themselves, including high-priced push-up bras and shoes. That’s a big difference from the last two Christmases when shoppers were focusing on practical items like coffee pots and socks for others and buying little for themselves.One of only a handful of disappointments was teen retailer Aeropostale Inc., which announced a management shakeup late Wednesday amid a surprise decline in November.The results are based on revenue at stores opened at least a year, which are considered a key indicator of a retailer’s health.”Overall, discretionary spending looks to be making a comeback,” said Ken Perkins, president of RetailMetrics, a research firm. The upbeat commentary from retailers’ reports Thursday “are encouraging signs.” He noted that retailers’ profits appear to be safe and inventory is at appropriate levels heading into December.But “consumers are still looking for deal; that is deeply ingrained,” he added. The question is whether Black Friday-type promotions will be necessary to bring shoppers back in.The stakes are high, because the holidays shopping season accounts for as much as 40 percent of annual revenue and profits for retailers. For toy merchants, that figure is 50 percent. The National Retail Federation is sticking to its 2.3 percent holiday growth forecast and said it’s too early to upgrade it.The strong results from stores follow encouraging signs from the online world following its much-hyped kickoff on Monday. Online sales for November are up 13 percent to $13.55 billion through Monday, according to research firm comScore, a research firm. That’s outpacing comScore’s holiday forecast for growth of 7-9 percent. Online sales account for 8-10 percent of total holiday spending, according to various estimates.The strong results from November followed tepid sales in September and October, dragged down in part by unseasonably warm weather.Shoppers made merchants work for their gains. Many stores had trotted out the “Black Friday” label on sales as far back as October. Many stores also opened on Thanksgiving including Old Navy, Toys R Us and Sears opened on Thanksgiving.More retailers this year discounted the entire store on Black Friday, said Madison Riley, a retail strategist at Kurt Salmon Associates. Gap, for example, had 50 percent off everything until 10 a.m. on Black Friday.Encouraging economic signs may have consumers feeling better. Americans’ income rose 0.5 percent in October, boosted by a 0.6 percent rise in wages and salaries, according to a government report released last month. That was after incomes didn’t rise at all in September.At the same time, layoffs are slowing. Initial jobless claims dropped by 34,000 to a seasonally adjusted 407,000 in the week ending Nov. 20, the Labor Department said. Claims have fallen in four of the past six weeks.The improvements helped to lift the Consumer Confidence Index to a five-month high in November, according to the Conference Board’s monthly survey released Tuesday.Among the winners in November was Costco Wholesale Corp., which reported a 9 percent increase in revenue at stores open at least a year. That was above the 6.2 percent estimate expected by analysts surveyed by Thomson Reuters.Others who topped expectations:andamp;#8212; Target Corp., with a 5.5 percent increase, above the 3.7 percent estimate.andamp;#8212; Limited Brands, which owns Victoria’s Secret and Bath andamp; Body Works, 10 percent increase, 4 percent expected.andamp;#8212; Macy’s Inc. reported a 6.1 percent gain; analysts had expected 5 percent. The department store chain raised its outlook for fourth-quarter earnings and revenue at stores open at least a year.andamp;#8212; Teen retailer Abercrombie andamp; Fitch, which had been hurt by young people flocking to less expensive brands during the depths of the recession, reported a robust 22 percent gain, far above the 6.8 percent estimate. That compares with a 17 percent drop in 2009 compared with the previous year.That’s a strong signal that teen shoppers are ready to splurge, Perkins said.
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