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Retailers report sluggish September sales as hot weather, economic worries curb spending

NEW YORK — Lingering summer weather and an uncertain economy kept consumers out of malls and stores in September, leaving many of the nation's big retailers with disappointing sales for the month and forcing several to cut their earnings forecasts.

As the store owners reported sales figures Thursday morning, the biggest losers were apparel sellers including Limited Brands Inc. and Mothers Work Inc. Target Corp., J.C. Penney Co., Limited Brands Inc. and Nordstrom Inc. were among those lowering their earnings outlooks.

Wal-Mart Stores Inc. posted a modest sales gain that was slightly below analysts' expectations, but raised its third-quarter profit outlook because of cost-cutting.

"Sales are coming in soft, as expected," said Ken Perkins, president of RetailMetrics LLC, a research company in Swampscott, Mass. "It was a perfect storm, a combination of abnormally warm weather, high food and energy prices, a continued sluggish housing marketing and tight credit."

Perkins added that if sales don't pick up, stores will be forced to slash prices to get rid of inventory and make room for holiday merchandise that will start to flow into stores this month. Weak sales are already contributing to the lowered earnings projections.

The news wasn't encouraging as the holiday season fast approaches. Retailers have been struggling with a sales slowdown for most of the year as shoppers contend with higher food and gasoline prices as well as the still weak housing market. But last month, stores also had to deal with warm, muggy weather that wilted consumer demand for fall clothing.

Michael P. Niemira, chief economist at the International Council of Shopping Centers, estimated the weather will have depressed sales results by 0.5 percentage point.

Wal-Mart reported a 1.4 percent increase in sales at stores open at least a year, known as same-store sales. Same-store sales are considered a key barometer of a retailer's health. That was slightly below the 1.8 percent estimate from analysts surveyed by Thomson Financial.

The company said apparel and home furnishings remain weak, and that company research continue to show that customers remain concerned about their finances, particularly the cost of living.

But the discounter raised its profit outlook to a range of 66 cents to 69 cents from its previous 62 cents to 65 cents due to cost cutting.

Target said same-store sales increased a slim 1.2 percent,dragged down by weak apparel sales. Analysts had expected a 2.2 percent estimate. The company said it believes its full-year earnings per share results will be below $3.60. The company previously said it expected to earn "slightly more or slightly less" than that amount.

Macy's Inc. posted a 2.7 percent drop in same-store sales, worse than the 1 percent projection. In a statement, Terry J. Lundgren, chairman, president and CEO, said sales were depressed from the year-ago period which benefited from the major launch of more than 400 former May stores to the Macy's nameplate. He also blamed warm weather for hurting sales.

Penney suffered a 4.6 percent drop in same-store sales, well below analysts' 0.1 percent forecast. The company slashed its third-quarter earnings forecast to $1.00 to $1.04 per share, compared to the previous guidance of $1.28.

Nordstrom Inc. had a 3.2 percent gain, below the 5.0 percent estimate. The company lowered is third-quarter profit outlook as a result of disappointing sales. It also said larger than planned markdowns used to clear excess inventory will hurt profits for the remainder of the year.

Gap Inc., which has long been languishing, suffered a 7 percent drop, worse than the 4.6 percent Wall Street expected.

Mothers Work Inc. suffered a 7 percent drop; analysts had expected a 8.5 percent decline.

Limited Brands, Inc. had a 4 percent drop in same-store sales, worse than the 1.5 percent forecast. The clothing retailer lowered its third-quarter earnings guidance, saying it may not earn a profit.

The Wet Seal Inc. reported same-store sales decreased 7.0 percent, slightly better than the 8.1 percent analysts expected. Pacific Sunwear of California Inc., another teen retailer, had a 2.7 percent gain, better than the 0.5 percent forecast.

On Wednesday, teen apparel retailer American Eagle Outfitters Inc. announced a 2 percent decline in same-store sales, below the 1.2 percent estimate. It also lowered its third-quarter earnings outlook due to soft September sales.