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Retail Sales Rise

Increases seen in specialty and department stores.

WASHINGTON — Apparel helped lift November retail sales as evidence mounted that consumers are spending again.

This story first appeared in the December 15, 2010 issue of WWD.  Subscribe Today.

Retail stocks failed to derive a benefit from last month’s strong showing as the S&P Retail Index logged its second consecutive down day.

Sales at specialty stores rose 2.7 percent and department store sales increased 2.8 percent in November compared with October, the U.S. Commerce Department said Tuesday. In 12-month comparisons, specialty stores saw sales up 7.5 percent to $18.8 billion, while department store sales rose 1.5 percent to $15.7 billion. Sales at general merchandise stores advanced 1.3 percent month-to-month and increased 5 percent to $51.9 billion compared with November 2009.

In the overall economy, retail sales gained 0.8 percent in November compared with October, and advanced 7.7 percent to $378.7 billion year-over-year.

“Retail sales data have now shown five consecutive months of strong gains and underscore continuing growth in consumer spending,” Commerce Secretary Gary Locke said.

Sandy Kennedy, president of the Retail Industry Leaders Association, said, “Growing consumer confidence and a successful opening to the holiday shopping season undoubtedly helped bolster store traffic and spending in November. The cheerfulness on display around the retail industry is not only a symptom of the holiday spirit, but an indication of optimism as consumers appear eager to get back in the game.”

As the National Retail Federation raised its estimate for holiday sales to a gain of 3.3 percent from its earlier estimate of 2.3 percent based on the November results, Matthew Shay, president and chief executive officer of the group, said, “The start to the holiday season has surpassed all expectations. While employment data is still a concern, we are starting to see improvement in other economic indicators that support an increase to our forecast.”

Kevin Regan, senior managing director and retail industry expert with FTI Consulting, called the November sales numbers “very promising.”

“When we compare it to last year in particular, some of the categories jumped out,” Regan said. “Clothing was a nice surprise.”

Year-over-year comparisons were against soft numbers, but there are still solid signs of improvement, he said. Growth in department stores especially, after several months of declines, was an encouraging sign that the category is “showing signs of life” and points to a return in spending by luxury consumers, Regan added.

Still, the S&P Retail Index slipped 0.5 percent, or 2.58 points, to 502.85 as shares of electronics retailer Best Buy Co. Inc. fell 14.8 percent on word that its revenues declined as the chain focused on higher-end products, such as 3-D TVs. Shares of Zale Corp. closed at $3.15, down 8.2 percent, following a report the company was exploring the sale of its Piercing Pagoda unit.

Among the gainers for the day were AnnTaylor Stores Corp., up 3.2 percent to $27.12; Macy’s Inc., 0.9 percent to $25.18; Abercrombie & Fitch Co., 0.8 percent to $55.14, and Saks Inc., 0.8 percent to $11.60.

The Federal Reserve, led by chairman Ben S. Bernanke, reiterated Tuesday that the economy was recovering, but not quickly enough to bring down unemployment, currently at 9.8 percent. The Fed is moving ahead with its controversial program to boost the recovery by injecting money into the economy though the purchase of $600 billion in government debt.

The Dow Jones Industrial Average perked up 0.4 percent, or 47.98 points, to 11,476.54 — the best close for blue-chip stocks since September 2008.

Also on Tuesday, the Labor Department reported in its Producer Price Index that wholesale prices for U.S.-made apparel declined 0.1 percent in November compared with October, but rose 0.2 percent from a year earlier.

Women’s apparel prices fell 0.1 percent month-to month and were flat in 12-month comparisons. Men’s apparel prices declined 0.3 percent in the month and 0.5 percent for the year.

Prices for all goods and services rose a seasonally adjusted 0.8 percent in November, driven mostly by food and energy costs, following 0.4 percent increases in October and September. The so-called core prices, which exclude the volatile food and energy sectors, rose 0.3 percent in November.

Food and fuel prices drove the headline PPI number up, said Nigel Gault, chief U.S. economist with IHS Global Insight. There was some upward pressure on prices from rising commodity prices, he said, “but there’s still plenty of slack in the economy to keep core inflation quiet.”

The PPI for apparel is not considered a key measure of prices because only about 5 percent of goods sold at retail are made in the U.S. The Consumer Price Index that is released today and includes all goods sold at retail, including imports, is the leading indicator of retail prices.