US retailers report slower sales growth

NEW YORK: Americans slowed down their spending in September as they took a pause after wrapping up their back-to-school buying, according to monthly reports from major retailers released Thursday.
Retailers reported monthly revenue results that were mixed. Merchants such as Limited Brands and Costco posted gains that beat Wall Street estimates, while Target and Macy's had increases that missed expectations.
Still, analysts say spending was fairly strong for the month. That is an encouraging sign for retailers as they're preparing for the upcoming winter holiday season, which traditionally the busiest shopping period of the year.
"This should set up to be a good holiday season," said Ken Perkins, president of Retail Metrics LLC, a research firm. "Consumers needed to take a breather once the back-to-school season is over."
Monthly sales figures are based on revenue at stores opened at least a year. That measure, which is considered to be an indicator of a retailer's health because it excludes results from stores recently opened or closed, offers insights into how Americans are spending during the slow economic recovery. But only a handful of merchants representing roughly 13 percent of the $2.4 trillion US retail industry reporter monthly revenue, and Target said yesterday that it will join rivals like Wal-Mart Stores Inc. and not report monthly figures anymore.
September's results, which followed robust spending by Americans in August, offers hope for retailers as they head into the winter holiday shopping season, a roughly two-month period in which they can make up to 40 percent of their annual revenue. It's the latest sign that consumers are feeling a little better about the economy. That's important because consumer spending accounts for 70 percent of economic activity.
Right now, confidence is at a seven-month high as people are feeling better about rising home prices and a rebounding stock market. Still job growth remains weak and prices for everything from food to gas are higher. On top of that, there's a worry that the US economy will fall into another recession next year. That's when tax increases and deep government spending cuts will take effect unless Congress reaches a budget deal.
With that as a backdrop, Target Corp.'s revenue at stores open at least a year rose 2.1 percent as shoppers picked up back-to-school items and groceries. Analysts polled by Thomson Reuters expected a 2.2 increase. Costco Wholesale's revenue at stores open at least a year rose 6 percent, above the 5.7 percent increase expected Wall Street. And Limited Brands, operator of Victoria's Secret, Bath & Body Works and other stores, posted a 5 percent gain that topped the 4.3 percent rise analysts' forecast.
Conversely, Macy's posted a 2.5 percent increase last month that fell short of analysts' predictions of a gain of 3.3 percent. Still, the retailer said combined August-September sales rose 3.6 percent and "were consistent with our positive year-to-date trend," said Terry Lundgren, the company's chairman.
Going forward, The National Retail Federation, the nation's largest retail trade group, is tempered its expectations for the winter holidays. The group said this week that it expects sales for the November and December period to rise 4.1 percent. That's more than a percentage point lower than the growth in each of the past years and the smallest increase since 2009 when sales were up just 0.3 percent. But the forecast still is higher than the 3.5 percent average over the past 10 years.
Still, retailers have to get through October, which could be dicey. Since the recession, stores have grappled with shoppers coming out to buy for certain holidays or periods like the back-to-school season, but they have pulled back once there isn't any reason to shop.
This year, stores could face an even rockier October because of the impact of the presidential election. Analysts say that shoppers typically pull back in the week before a presidential election. However, sales typically rebound the next month after the political contest.