By  on October 7, 2009

Retailers reporting September same-store sales on Thursday may finally have something to cheer about, although perhaps not too enthusiastically.

A shift to a later Labor Day and back-to-school season are likely to carry a hefty benefit, analysts said. Still, despite easier comparisons as retailers “anniversary” last September’s financial crisis, some experts worry consumers’ miserly mentality will not ease up, making for a slow turnaround and tepid holiday.

Optimism trumped caution, however, as retail stocks leaped Tuesday for the second day in a row. The S&P Retail Index advanced 7.30 points, or 2 percent, to 379.64, 17.3 percent of its year-ago close but 83 percent ahead of its Nov. 21 low point for the past 52 weeks.

While equities enjoyed a good day, the major indices failed to keep pace with the retail index as the Dow Jones Industrial Average and S&P 500 both advanced 1.4 percent to 9,731.25 and 1,054.72, respectively. U.S. markets picked up on the strong tempo of trading earlier in Europe and a strong day for Hong Kong’s Hang Seng Index. (For more on stocks, see page 18.)

Consumers “have faced unprecedented economic uncertainty and they continue to behave frugally, spending cautiously and saving more, which is contributing to sales weakness at many apparel retailers, particularly at those that are more aspirational in price and/or merchandise assortment,” said Stifel Nicolaus, retail analyst Richard Jaffe, in a comparable-sales preview call on Tuesday.

Susquehanna Financial Group retail analyst Thomas Filandro agreed, adding consumers “continue to be on the prowl for value-centric deals and percentage-off promotions, and more importantly are ‘event shopping,’ which suggests the sector could experience a lull in business before the official start to the holiday selling season, beginning Black Friday.”

Regardless, Filandro said that, in September, transactions and average dollar sales “have shown signs of bottoming” as consumers typically waited for Labor Day promotions, shopping closer to need and shifting sales out of August into September.

In a research note entitled “Less Bad Is the New Norm,” analyst Jennifer Black, president of Jennifer Black & Associates, said September results “could prove to be better than expected” not only because the advantageous calendar shift, but also because “the Baby Boomers are coming back and opening their purse strings, especially for those retailers who really cater to that customer. We have seen a lot of new fashion out there and it is enticing the consumer to spend dollars.”

She also noted that, with retailers keeping inventories lean, shoppers will be less apt to wait for sales.

Overall, consumer spending increased in September, as sales on a year-over-year basis remained positive for the fourth week in a row, growing 1 percent, according to a survey conducted by the International Council of Shopping Centers Inc. and Goldman Sachs. For the most recent week ended Oct. 3, sales edged up 0.3 percent, versus a 0.1 percent pickup the prior week.

“A bout of cooler weather helped to spur customer traffic, especially at department stores and discounters, and helped the month to finish on a positive note,” said ICSC chief economist Michael Niemira, who added that he expects sales to be down about 2 percent in September.

But Lazard Capital Markets retail analyst Todd Slater said that, while September comps are to improve to down 2.2 percent from a 3.6 percent decline in August, “if you normalize for the Labor Day shift that probably benefited September by 3 to 4 percent, the month isn’t as good as it looks.”

On the positive side, Slater said the improvement in comps that began in August continued into September and is likely to persist through January — although he said comparable 2008 numbers were weak, with poor weather compounding anemic retail conditions.

Softline retailers are expected to improve, according to Barclays Capital retail analyst Jeff Black, who anticipates his index to turn positive for September to 0.8 percent compared with a 0.9 percent slide in August.

“We expect the most significant improvements during September to come from the teen retailers benefiting from the later school openings which weighed on results in July and August,” he said.

J.P. Morgan retail analyst Brian Tunick pointed specifically to teen retailer Zumiez Inc. as indicative of gains the sector may have experienced as a result of a late Labor Day.

“Zumiez already reported a 29 percent positive comp for September week two and should have given investors some taste of just how big the shifts benefited the early part of the month,” he said, cautioning “weeks three and four then returned to a double-digit comp decline trend.”

Looking beyond September, however, retailers face a the possibility of a drought as consumers focus on Christmas sales, which generally begin in mid-November. Most analysts believe that between now and November, traffic will slow, but declines won’t be as steep as they were earlier this year.

“While we’re convinced that significant improvement versus last year’s suppressed results is likely,” said Stifel Nicolaus’ Jaffe, “we’re concerned that investors have grown overly optimistic and are discounting a dramatic recovery and outcome that we think is overly ambitious.”

Among the principal gainers from the uptick in retail stocks were Syms Inc., up 9.5 percent to $8.28, despite reporting a larger second-quarter loss after the markets closed Monday (see page 18 for more on Syms); The Bon-Ton Stores Inc., up 7.7 percent to $7.54, and The Talbots Inc., up 7.4 percent to $9.56. Liz Claiborne Inc. and Kenneth Cole Productions Inc. were up 8.6 and 8.2 percent, respectively, to $4.93 and $9.75, while Oxford Industries Inc. tacked on 6.6 percent to $21.40. Among beauty issues, Inter Parfums Inc. led all stocks tracked by WWD with an 11.5 percent jump to $12.50, while Sally Beauty Holdings Inc. added 6.6 percent to $7.28.

The strong pace for stocks was set earlier in the day in Hong Kong, where the Hang Seng Index moved up 1.9 percent to 20,811.53, while Japan’s Nikkei 225 finished the day flat at 9,691.80. However, European markets were bullish, with London’s FTSE 100 up 2.3 percent to 5,137.98 and the CAC 40 in Paris ahead 2.6 percent to 3,770.21.

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