NEW YORK — The holiday selling season got off to only a ho-hum start in November, but retail executives remain hopeful that Thanksgiving leftovers won’t translate into promotional indigestion this month.

As has been the case for the past several months, high-end retailers such as Saks Fifth Avenue, Neiman Marcus Group and Nordstrom generated strong comparable-store sales as they benefited from consumers’ greater willingness to trade up for differentiated products and top-notch customer service. On the other end of the retailing spectrum, discount stores did fairly well, but stores in the middle, from Kohl’s and Sears to May and Dillard’s, withered, due to warm weather and a lack of must-have items.

“November sales were a mixed bag, even in light of generally easy year-over-year comparisons,” wrote Deborah Weinswig, broadline retailing analyst with Smith Barney.

Still, Weinswig was hopeful, based on strong November traffic patterns that bode well for the season as it progresses, “due to an increased focus on advertising by most retailers and a strengthening consumer environment.” She added that conservative inventory plans for the fourth quarter should allow for greater full-price selling and improved gross margins.

Calling the Thanksgiving weekend sales results a “turkey” compared with last year, Todd Slater, retailing analyst with Lazard Frères, wrote that almost every retailer reported sales strength up until the last weekend, which caused it to be the weakest week of the month. He blamed the poor post-Thanksgiving performance on fewer discounts, but said he expects that to reverse itself in the days leading up to Christmas.

“If inventory is as well managed as we think, and retailers don’t panic with promotions, I believe margins will continue to remain strong,” Slater wrote. “So, despite the turkey that retailers got over the Thanksgiving Day weekend, fourth-quarter earnings should be just ducky.” Slater predicted December comps will increase 4 percent.

Dorothy Lakner, specialty retail analyst with CIBC World Markets, agreed: “Iview the holiday this year, overall, to be good, and better than last year, driven by lower inventory and better margins, assuming that retailers are able to hold off on their promotional activity and not get crazy.”While observing that the mood surrounding Thanksgiving was “subdued,” Lakner said the weekend is more “hype” than a true indicator of holiday sales. She noted that while last year’s Thanksgiving was strong, the overall 2002 season was one of the most disappointing.

Still, investors wanted to see knockout sales reports for tidings of comfort and joy leading into December. Failing to receive them, retail stocks moved lower Thursday, dragging down the Standard & Poor’s Retail Index 4.06 points, or 1.1 percent, to 373.68 as the Dow Jones Industrial Average advanced 57.40, or 0.6 percent, to 9930.82.

Overall, the Goldman Sachs November monthly index of same-store sales turned the corner, rising 3.4 percent, as expected, compared with a decrease of 1.2 percent in November 2002. Discount stores, led by Target’s above- plan 7.4 percent gain, rose 5.7 percent, on top of a 1 percent gain last year and better than the 4.9 percent expected. Specialty retailers increased 1.9 percent, better than the 0.1 percent reported last year, but short of the 2.7 percent forecast. Department stores reported a worse-than-expected 1.3 percent decline, but fared better than the negative 6.7 percent reported last year.

A WWD survey of 50 retail companies reporting results on Thursday indicated that 25 had increases in November versus 24 with decreases, while one — Gottschalks — was flat. That’s better than either the October results (17 increases, 32 decreases and one flat) or those from November 2002 (14 increases, 35 decreases and one flat).

Janet Hoffman, a partner with Accenture’s retail practice, said she was impressed with November’s results, particularly the specialty stores like Gap, Ann Taylor and Chico’s FAS. “They clearly heard the innovation whistle,” she said.

SPECIALTY STORES

Gap Inc.
’s 6 percent increase in its November comps ignited a strong start to its holiday season. All three units advanced, led by Banana Republic’s 14 percent uptick and followed by Old Navy (7 percent) and Gap (5 percent). Merchandise margins were in line with last November. Traffic levels improved in November relative to October in all divisions. November store traffic at Old Navy rose 4 percent after a 2 percent decline in October, while the traffic decline at Gap moderated to a 4 percent drop from a 7 percent fall.“Overall we were pleased with November’s performance,” the company said in a statement. “In each brand, customers responded well to holiday product throughout the month.”

Limited Brands posted a 1 percent comp increase, driven by Victoria’s Secret and Bath & Body Works’ comp growth of 8 percent and 6 percent, respectively. Apparel comps stayed negative, falling 10 percent, due to a reduction in promotional activities, as Express fell 10 percent and Limited stores 9 percent. The firm said it expects VS’ comps in December to be flat to slightly negative due to the timing of its semiannual sale.

Pacific Sunwear of California, Aeropostale and Hot Topic continue to gobble up sales, with comps up 11.7 percent, 10.3 percent, and 7.3 percent, respectively. HT upped its fourth-quarter earnings guidance 1 cent to 42 cents a share.

At PacSun stores, comps surged 11.4 percent, consisting of increases in guys’ (6 percent), girls’ (7 percent), footwear (strong double digits) and accessories (high teens).Demo comps rose 13.9 percent, with girls and accessories up double digits and men’s slightly ahead.

On the other hand, Abercrombie & Fitch and American Eagle Outfitters continued to struggle. At A&F, comps fell 13 percent, with A&F stores down mid-teens and Hollister’s comps falling in the mid-single-digit range. A&F blamed its “understated promotional posture in a heightened industry-wide emphasis on special Thanksgiving weekend promotions” for its difficulties last month. At AE, overall comps fell 6 percent, with AE stores down 6.2 percent and Bluenotes/Thriftys stores down 2.4 percent.

Positive results at Ann Taylor Stores and Talbots were better than expected. At AT, comps rose 9.6 percent as AT advanced 7.3 percent and Loft moved ahead 14.9 percent. The firm raised its fourth-quarter earnings expectations 2 cents to a range of 43 to 45 cents a share. Less dramatically, Talbots squeezed out a 0.8 percent gain for the month.

Other winners in November included Bebe Stores (9.1 percent), Cache (5 percent), Chico’s FAS (16.3 percent) and Claire’s Stores (6 percent). Those with declines included Charming Shoppes (8 percent), Gadzooks (28.1 percent), Mothers Work (3.7 percent) and Wet Seal (6.7 percent).DEPARTMENT STORES

Better department stores enjoyed impressive comp gains in the month, but the larger sector suffered from unseasonably warm weather and decreased traffic, among other factors.

Saks Inc.’s two divisions continued to build on recent same-store sales strength as its department store group comped up 3.7 percent and Saks Fifth Avenue shot up 11.3 percent. Overall, Saks’ comps grew 6.7 percent.

Neiman Marcus Group also rode strength in women’s contemporary apparel, accessories and cosmetics, among other categories, to register a 5.8 percent improvement in comps. The company’s specialty stores segment, which includes Neiman Marcus and Bergdorf Goodman, comped up 5 percent, while the direct business reported a 6.7 percent same-store sales increase. Even more impressive, growth in comp and overall sales, which rose 6.1 percent to $295 million, came despite the elimination of several promotional events in the period, NMG said.

Not to be outdone, Nordstrom exceeded plan as comps advanced 7.4 percent last month. All geographic regions and categories, with the exception of women’s bridge and special sizes, posted gains, said the firm on a prerecorded call. Nordstrom added that it experienced strong sales on Black Friday, but that historically, its best period is the two weeks before Christmas.

In the more moderate segment, Federated Department Stores said comps dipped 0.1 percent, but that was within the firm’s guidance of minus 1 to plus 1 percent for the month. The operator of the Macy’s and Bloomingdale’s nameplates, among others, said December comps are forecast in the same range.

May Department Stores Co., as reported, said same-store sales dipped 1.7 percent, but that was better than most analysts’ estimates, which ranged from minus 2 to minus 4 percent, and better than the year-ago plunge of 7.9 percent. Excluding the 30 remaining stores May has yet to divest, comparable-store sales fell 1.2 percent.

The national chains had different takes on last month. J.C. Penney Co.’s department store comps slipped fractionally, or 0.8 percent, but the firm pointed out on a call that those results do not include sales from Thanksgiving weekend, which, like last year, will be included in December’s results. With Thanksgiving getting off “to a very good start,” Penney’s is forecasting December comps to grow in the low-single digits.On the other hand, Sears, Roebuck & Co. was disappointed with a below-plan 3.6 percent drop in domestic department store comps. Overall apparel and accessories same-store sales fell in the mid-single digits with women’s apparel down in the low-single digits. Based on October’s and November’s results, fourth-quarter comps are now forecast to be flat to a low-single-digit decrease, said Sears on a call.

Elsewhere, mild weather caused depressed traffic at Kohl’s Corp., sending the hybrid retailer to a 4.4 percent comp decline.

Dillard’s said same-store sales fell 6 percent, while Bon-Ton Stores’ comps dipped 0.7 percent.

MASS MERCHANTS

Like their counterparts at the other end of the price spectrum, discount players for the most part posted same-store sales gains last month.

Mighty Wal-Mart Stores didn’t exceed its guidance, but its total U.S. same-store sales increase of 3.9 percent just missed falling exactly at the midpoint of the expected 3 to 5 percent range. Comprising a 3.7 percent rise at Wal-Mart Stores and a 4.7 percent gain at Sam’s Club, the firm said on a call that higher traffic was responsible for more than two-thirds of the advance. Sales were strongest in the first and second weeks of the month. For December, the firm is once again looking for total U.S. comps to improve 3 to 5 percent.

Better-than-expected sales at Target Stores allowed Target Corp. to achieve overall comps that exceeded plan in November. With Target Stores comping up 7.4 percent, and Marshall Field’s and Mervyn’s comping down much more moderately at 0.1 percent and 1.5 percent, respectively, total company comps rose 6.2 percent.

“While we are pleased with these early holiday results, December is typically a much more significant contributor to our fourth-quarter financial performance,” said chief executive officer Robert Ulrich in a statement.

TJX Cos. comped up 1 percent, but that was below plan, the company said. Although disappointed in the results, ceo Edmond English said in a statement the company was pleased with better-than-expected margins and is maintaining its fourth-quarter earnings estimate of 41 to 43 cents a diluted share.Ross Stores, the nation’s second-largest apparel off-pricer after TJX, said November same-store sales grew 5 percent. Juniors’, accessories and shoes were among the strongest-selling categories, the firm said, with California, Hawaii, Arizona and Texas being the best-performing markets. With the “solid start to the holiday season,” Ross reaffirmed its December same-store sales guidance of a 2 to 3 percent increase.

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