NEW YORK — The month that was expected to provide some of the easiest retail comparisons of the year instead provided its biggest disappointment.Retailers marked the one-year anniversary of the Sept. 11 terrorist attacks last month with disappointing sales in malls that came up short on acquisitive consumers. Mild weather in many parts of the country limited sweater and outerwear sales, but retailers and analysts agreed that the psyche of the American consumer is a far larger problem than weather or even the West Coast dock lockout: American consumers appear far more concerned about their own finances, the nation’s economy and the possibility of war than about having precisely the right look for fall.Dramatized by disappointments from retail darlings Wal-Mart, Target and Kohl’s, retailers Thursday reported negative or below-plan same-store sales for September, as sluggish sales activity retarded even further toward the end of the month. Already two months into the third quarter, a number of retailers, including Federated Department Stores, Sears, Roebuck & Co., Talbots and Kohl’s, guided Wall Street analysts lower. And more are sure to follow, observers cautioned.Retail’s lackluster showing kept it from taking full advantage of Thursday’s rally on Wall Street, which pushed the Dow Jones Industrial Average up 247.68 points, or 3.4 percent, to close at 7,533.95. Likewise, the Standard & Poor’s 500 was up an even stronger 3.5 percent to 803.92, while the S&P Retail Index rose only 1.7 percent to 258.64.Blaming a combination of weak traffic, unenthusiastic spending and unseasonable weather, Goldman Sachs retail analyst Adrianne Shapira said: "The month was ugly. It is hard to see what will get us out." She added that the numbers suggest a consumer malaise that’s worse than the economic data suggests.Overall, the Goldman Sachs monthly index of comp sales rose 1.2 percent, slightly lower than the 1.6 percent expected, but better than September 2001’s breakeven results. Again, the discount channel led the group, increasing 3.1 percent in September, compared with a 3.3 percent projection and last year’s 4.4 percent gain. Department and specialty stores followed, with decreases of 3 percent and 0.1 percent, both below estimates, versus year-ago declines of 6.4 percent and 12 percent, respectively.Steve Skinner, a partner at Accenture’s retail industry group, said: "We are seeing continued erosion in the retail marketplace, exacerbated by the strike on the West Coast. I am concerned with the performance by the discounters and consumers continuing to curtail spending. That does not bode well for the future."Among the stronger-performing exceptions for the month were advancers Neiman Marcus Group (18.7 percent), Claire’s Stores (11 percent), Limited Brands’ Victoria’s Secret stores (16 percent), Chico’s FAS (21.7 percent), Pacific Sunwear (4.4 percent), Hot Topic (5.9 percent) and Cache (14 percent).Calling the month a "catfight" between retailers, specialty retail analyst at Pacific Growth Equities Marcia Aaron said: "It is a pretty tough month. Customers really need a reason to shop, and right now there just aren’t any." Among the missing incentives were holidays, weather, "spectacular discounts" and tax refunds.At the start of the year, as promotions and a new bohemian fashion trend helped sales, retail executives and analysts said they expected a rebound in the second half as the comparisons got easier and inventories fell more in line with sales. Clearly, such a turnaround never materialized. Even more disturbing to many retailers is that September’s sluggishness has continued into early October."Since the middle of the summer, it became evident that September comparisons weren’t going to be as easy to beat as expected," said Bear, Stearns retail analyst Dana Telsey in reference to last year’s terrorist attacks. "The consumer slowdown was on the horizon and retailers did not know how to properly plan going up against an event they had never faced before. "Essentially, the month ended weaker than it began and we look for promotions to continue into October," she noted. "The longshoreman lockout has caused disruptions and the full impact on earnings will take place in the fourth quarter and not the third. Retailers are assessing when their holiday goods will arrive, and obviously many shipments will be late." Accenture’s Skinner said of the fourth quarter: "Buckle your seats. It may be a rough ride."SPECIALTY STORESGap Inc. said declines in traffic, including a 16 percent decrease at Old Navy and 12 percent at its Gap stores, and higher levels of sales led to the San Francisco-based apparel retailing giant’s 2 percent drop in comps versus a 17 percent decline last September. Gap division was down 3 percent and Banana Republic and Old Navy off 2 percent each. "Overall, the negative traffic trends and promotional retail environment experienced in August continued throughout September," Gap’s chief financial officer Heidi Kunz, said. "As a result, the level of promotional activity was higher relative to plan. However, compared to last year, we sold less at markdown and had better markdown margins, resulting in a year-over-year improvement in total company margins."Kunz said that "roughly 25 percent of our holiday inventory was caught in transit during the port closure period. As a result, we expect portions of the holiday flows to arrive in stores up to a few weeks later than the original anticipated in-store dates."Third-quarter earnings aren’t expected to be affected by the closures, but Gap estimated that they would exact a 2 to 7 cent toll on fourth-quarter earnings per share. To minimize the effect, Gap is moving goods between stores, selectively using air freight and re-assorting stores where appropriate.The month was hardly kind to the youth-oriented retailers who many say were caught with similar product offering.With a 10 percent comp drop, Abercrombie & Fitch said its September results were below plan as sales decayed in the final two weeks of the month. Women’s remained stronger than men’s. A&F, which operates 555 stores, said based on current sales trends, it is comfortable with third-quarter earnings forecasts of 41 to 45 cents per share. Analysts pegged the mall-based retailer to report third-quarter earnings of 48 cents.Other youth specialty retailers feeling the September slump included: American Eagle Outfitters, down 8.1 percent; Wet Seal, down 7.3 percent; Gadzooks, down 6.8 percent, and Aeropostale, down 2.5 percent.Among the teen-oriented advancers were Pacific Sunwear of California Inc., up 4.4 percent, including a 4.1 percent gain at PacSun stores and 7 percent rise at Demo, and Claire’s Stores, up 11 percent. Both guided investors to higher quarterly earnings.PacSun said it is now expecting third-quarter earnings of 40 cents per share versus the 27 cents reported in the same quarter last year. At PacSun, female apparel comped up 11 percent, footwear was up 20 percent and accessories rose 9 percent, but young men’s was down 5 percent.Announcing an increase in third-quarter EPS expectations to 18 cents from 11 cents, Claire’s chairman and chief executive Rowland Schaefer said in a statement, "Sales for both our North American and European accessory stores were strong in September and ahead of plan. In regard to the longshoreman’s lockout, we have been flying in merchandise for the past couple of weeks and do not expect the current situation to significantly impact our holiday merchandise presentation. Furthermore, as the majority of our accessories we are flying in are lightweight, we do not expect our margins to be materially impacted either."Limited Brands reported a corporate comp increase of 6 percent and apparel comp increases of 3 percent, but both fell below the Columbus, Ohio-based firm’s expectations. Inventory ended the month up 3 percent and up 1 percent at its apparel group, but even at these levels, the firm said stocks are still slightly higher than it would like as a result of soft August and September sales. Victoria’s Secret stores’ comps flew ahead 16 percent, above expectations across all merchandise categories as the Body By Victoria free-panty direct mail offer drove volume. Bath & Body Works was up 2 percent, Express ahead 3 percent and Limited stores 8 percent ahead, while Lerner New York was flat. At Express, women’s comps were below expectations as strength in woven tops was more than offset by a weakness in sweaters.Ann Taylor Stores also reported a rise in comps, 2.3 percent versus a 13.9 percent year-ago decline, but were were below expectations. By division, comps were up 0.4 percent at AT versus a 16.5 percent decrease last year, and up 4.9 percent for the Ann Taylor Loft division, compared to a 1.5 percent fall last year.Ann Taylor chairman J. Patrick Spainhour said, despite lower comps for September and the effect of the uncertain economic environment on consumer traffic, AT remains comfortable with current third-quarter EPS guidance in the range of 50 to 51 cents and with October comps expectations of a low single-digit decline.On the other hand, Talbot’s reported a 6.1 percent decrease in comps — below expectations — and slashed its EPS outlook for the third quarter to between 59 and 61 cents, and for the fourth quarter, 48 to 53 cents. Last year, results were 58 cents and 53 cents, respectively."Our sales trends were tracking very close to plan as we entered the month," said Arnold Zetcher, chairman and chief executive of Talbot’s. "However, they declined significantly following Labor Day and did not improve as expected during the remainder of the month."DEPARTMENT STORESDepartment stores endured their share of shortfalls and downgrades in September, with sales from even some of the strongest players falling short of expectations and year-ago results.The usually robust Kohl’s Corp. weathered a 3.2 percent comp decrease for the month. "All seasonal apparel businesses — sweaters, outerwear and fleece — were very difficult with comp-store sales significantly below last year," said chief executive officer Larry Montgomery, in a statement. Accordingly, the retailer, which expects October to produce a mid-single-digit same-store sales increase, is looking for earnings of 34 to 35 cents in the third quarter. Wall Street was looking for earnings of 37 cents for the quarter.Federated Department Stores Inc.’s chairman and ceo James Zimmerman blamed his company’s flat showing in comps for the month on "uncertainty over the economy and the possibility of war." The continuing presence of these factors prompted the retailer to pull down its third-quarter expectations to 30 to 35 cents a share, where they had been in the 35- to 45-cent range.May Department Stores Co.’s comparable-store sales slid 6.2 percent in September.J.C. Penney Co.’s department stores comped down 3.1 percent, after weakness in the fifth and largest-volume week of the month offset the stronger performance until then. Sales of outerwear and sweaters were negatively impacted by unseasonably warm weather, while fine jewelry and home were the month’s strongest merchandise categories, according to a spokesman on a recorded call.Sears, Roebuck & Co. posted a 5.9 percent comp decrease for the month. The firm’s full-line stores comped down by high-single digits. Within those stores, same-store sales of softlines were down in the high teens, while women’s and men’s apparel declined in the low teens."We have made significant changes to our stores, our merchandise offerings and our customer service model over the past year," said chairman and ceo Alan Lacy. "As we enter the holiday shopping season, our customers will benefit from these changes through an improved shopping experience and a more exciting merchandise offering." On Monday, Sears warned its third-quarter earnings would chime in at 80 to 82 cents a diluted share, including 3 cents of dilution related to the Lands’ End acquisition. Wall Street had the firm penciled in for 86 cents.Comparable-store sales at Dillard’s Inc. slid 5 percent for the month. September comps at Saks Inc. inched up 3.3 percent with a 2.1 percent fall at its department stores and an 11.8 percent climb at the Saks Fifth Avenue unit.Other upscale department stores enjoyed increases of varying degrees with Neiman Marcus Group comping up 18.7 percent and Nordstrom Inc. up 1.7 percent.Same-store sales for regional department stores ranged from up mildly at Gottschalks Inc. (1.4 percent) to down slightly for Elder-Beerman Stores Corp. (0.8 percent) and more significantly depressed at Bon-Ton Stores Inc. (7.5 percent).MASS MERCHANTSUsually bastions of sales strength, the major discounters stumbled in September as both Wal-Mart Stores Inc. and Target Corp. crossed the finish line with comps below their initial plans.Total comparable-store sales at Wal-Mart advanced 3.3 percent, with a 3.6 percent uptick at its flagship division and a 1.6 percent rise at Sam’s Club. The firm met expectations for a 3 to 4 percent increase, which were reduced mid-month from a projected 4 to 6 percent rise. Both average ticket size and traffic were positive, with the former making up the majority of the comp increase, according to a spokeswoman on a recorded call. "Apparel sales improved in certain regions of the country when fall temperatures arrived," she said. The discounter stood by its third-quarter earnings target of 40 to 41 cents a share. Overall, October comps are slated for a 2 to 4 percent increase.Same-store sales at Target Corp. dropped 0.8 percent in September. Its namesake division’s 0.4 percent uptick came in significantly below the planned 3 to 5 percent increase, while the Mervyn’s and Marshall Field’s divisions posted comp declines of 3.5 and 10.1 percent, respectively.The showing was weak enough for the firm to "modestly" lower its near-term sales and earnings expectations, but not quantify them. Wall Street had the firm slated for profits of 30 cents a share. "At month end, inventories were in very good condition at Target and Mervyn’s with little or manageable markdown risk despite the sales shortfall in September," said a spokeswoman on a recorded call. However, the state of the ports on the West Coast may create some markdown risk going forward, she said. October same-store sales projections for the Target division call for a flat showing to 2 percent rise with the total company coming in slightly below that.September comps at TJX Cos. slid 1 percent and caused the firm to reduce third-quarter earnings estimates to 28 to 30 cents a share. Analysts were expecting EPS of 33 cents. Stein Mart Inc., with comps up 4 percent for the month, projected a third-quarter loss of 10 cents a share, 4 cents more than Wall Street had expected. Though ShopKo Inc.’s total comps slid 3.2 percent for the month, the firm pared its third-quarter projection losses to 3 to 7 cents a share, while analysts were expecting a 9-cent deficit. Factory 2-U Stores Inc. comped down 2.4 percent, while Value City Department Stores Inc. slid 7.5 percent. Ross Stores Inc. managed a 7 percent comp uptick for the month.

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