The nation’s retailers suffered miserably through November as a modestly positive start to the holiday shopping season wasn’t strong enough to offset weak spending the rest of the month.
After posting two consecutive monthly sales gains after more than a year of declines, merchants collectively posted a surprise 0.3 percent decrease for November, compared with a year ago when business plummeted to historic lows as spooked shoppers clamped down after the financial meltdown. The sales decrease is an ominous sign for an economy in the early stages of a fragile recovery.
Now, the big worry is whether consumers won’t go back to the stores until the final hours before Dec. 25 as they wait for even bigger discounts in a season that many analysts had hoped would generate sales that would be unchanged from a year ago.
According to sales results announced Thursday, most stores including department store chains Macy’s Inc.,Children’s Place Retail Stores Inc., teen merchant Abercrombie & Fitch Co. and discounter Target Corp. posted sales declines. Warehouse club operator Costco Wholesale Corp. posted a sales gain, though it’s smaller than expected. Another exception was Limited Brands Inc., which runs Victoria’s Secret and Bath & Body Works. It reported a solid sales gain instead of the sales decrease that Wall Street projected.
The figures are based on sales at stores open at least a year and are considered a key indicator of a retailers’ health because they exclude the effects of store expansions or closings.
The 0.3 percent drop, according to the International Council of Shopping Centers-Goldman Sachs Index, is far worse than the original 5 to 8 percent growth forecast, which was whittled down to 3 to 4 percent gain earlier this week. The weak results come on top of a 7.7 percent drop a year ago.
“This suggests that consumers are still under a significant amount of pressure from unemployment and job worries,” Ken Perkins, president of retail research firm Retail Metrics.
After consumers showed some signs of life in September and October, merchants saw a sales lull throughout November until shoppers crowded stores and malls for the early morning specials for the day after Thanksgiving.
According to reports, however, shoppers were picky about what they bought for themselves and others, focusing on discounted basics like microwaves, boots and bed sheets over the holiday weekend. The hot areas were electronics and online shopping, which is not reflected in most of Thursday’s sales figures.
Economists say that depressed spending could persist for several years amid stubbornly high unemployment — now at 10.2 percent, the highest in 26 years.
Amid a challenging economy, Costco fared well, posting a 6 percent increase; results were less than the 8.1 percent gain that analysts surveyed by Thomson Reuters expected. However, half of that increase results from currency shifts and higher gas prices.
But discounter Target said that strong sales during Thanksgiving weekend were not enough to offset weak business the rest of the month, sending sales in stores open at least a year down 1.5 percent. The drop was bigger than the 0.5 percent drop analysts were expecting and were on top of the 10.4 percent decline in November 2008.
Discount retailer Fred’s Inc. posted a 3.3 percent decline, a bigger drop than the 1.6 percent decrease analysts predicted. The retailer said its pharmacy department was strong in the month but discretionary spending by consumers remained weak.
Consumers “utilized layaways to a much greater extent than last year, deferring recognition of those sales until December,” said CEO Bruce A. Efird.
Macy’s sales in stores open at least a year fell 6.1 percent in November, a bigger than analysts expected.
Macy’s said the month was hurt by a shift of a sales event and warm weather. Still, Macy’s said it had strong traffic early on Black Friday, the day after Thanksgiving when many Americans go shopping. Analysts had expected a 3.1 percent drop.
Abercrombie & Fitch’s woes continued, with sales falling 17 percent, much worse than the 9.3 percent decline analysts predicted.
But Limited posted a 3 percent sales gain, surpassing estimates from analysts who had expected a 2.5 percent decline.
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