New York City, Several of the nation's largest retailers cut their earnings forecasts Thursday after lingering summer weather and an uncertain economy kept consumers from shopping last month and left the big merchants with disappointing sales.
As the store owners reported September sales figures Thursday, the biggest losers were apparel sellers including Limited Brands Inc. and Gap Inc.
Sales are coming in soft, as expected," said Ken Perkins, president of RetailMetrics LLC, Swampscott, Mass., in an Associated Press report. "It was a perfect storm, a combination of abnormally warm weather, high food and energy prices, a continued sluggish housing marketing and tight credit."
Other experts warned the slowdown could extend beyond September.
“Warm weather no doubt explains part of the chill in September sales, but shoppers are also clearly telling us they want to hold the line on spending. That was the case for back-to-school spending and shoppers are also cutting their plans for Halloween and the holidays,” said Frank Badillo, senior economist for TNS Retail Forward.
Michael P. Niemira, chief economist at the International Council of Shopping Centers (ICSC), estimated the weather depressed sales results by 0.5 % point.
The ICSC-UBS tally of retail sales rose a slim 1.7% in September, compared to a 4% increase in the year-ago period and forecast for a 2.5% improvement. Excluding the impact of the weather, the results were in line with a 2.3% spending increase seen since February, the start of the fiscal year for merchants. The sales tally is based on same-store sales.
Among the retailers on Thursday reporting September sales, the results included:
Wal-Mart reported a 1.5% increase in same-store sales, slightly below the 1.8% estimate from analysts surveyed by Thomson Financial. The chain said apparel and home furnishings remain weak, and that company research continues to show that customers remain concerned about their finances, particularly the cost of living;
Target said same-store sales increased a slim 1.2% dragged down by weak apparel sales. Analysts had expected a 2.2% estimate;
Macy's Inc. posted a 2.7% drop in same-store sales, worse than the 1% projection;
J.C. Penney suffered a 4.6% drop in same-store sales, well below analysts' 0.1% forecast. The company slashed its third-quarter earnings forecast to $1.00 from $1.04 per share, compared to the previous guidance of $1.28;
Nordstrom Inc. had a 3.2% gain, below the 5.0% estimate. The company lowered is third-quarter profit outlook as a result of disappointing sales. It also said larger-than-planned markdowns used to clear excess inventory will hurt profits for the remainder of the year.
In the apparel segment, Gap Inc. suffered a 7% drop, worse than the 4.6% Wall Street expected. Mothers Work Inc. suffered a 7% drop; analysts had expected a 8.5% decline. Limited Brands, Inc. had a 4% drop in same-store sales, worse than the 1.5% forecast. American Eagle Outfitters Inc. announced a 2% decline in same-store sales, below the 1.2% estimate.
Some retailers managed to buck the trend, however. Same-store sales at Saks Inc. rose 7.7% in September on strong results for shoes, women's apparel and men's accessories. TJX Cos. Inc. said Thursday September same-store sales rose 2%, above Wall Street estimates.