Retailers delivered solid sales gains in October that topped
views Thursday as they carried over the momentum from a strong
Sales at stores open at least a year rose 5% vs. a year ago,
says Ken Perkins, president of Retail Metrics. Analysts forecast
a 4.6% rise. The results exclude drugstore chains.
Sixty-one percent of the companies in the survey beat
"It was a decent month, given the ongoing distractions of the
presidential election coupled with the week-four distraction on
the East Coast as consumers prepared for Hurricane Sandy's
wrath," Perkins said.
The main driver for the month's solid showing was improvement
in consumers' net worth resulting from rising home prices and a
rising stock market, as well as a better economic picture, says
Retailers also delivered solid gains in September with a 3.9%
increase in same-store sales.
Overall, the consumer's mood is "one of cautious optimism,
notwithstanding what's taken place on the East Coast resulting
from Hurricane Sandy," Perkins added.
"Factoring out the unknown head winds created by Hurricane
Sandy, the strong back-to-school selling period coupled with what
appears to be an improving economy, the holiday should turn out
to be pretty solid," he said.
The strength in October was across the board. High-end
department store operatorNordstrom (
) saw the highest single monthly gain with a 9.8% rise in comps
vs. a year ago, sailing past forecasts for a 6.5% rise.
Off-price retail operatorTJX (
) was another standout, seeing a 7% pop in comps vs. last year
and handily topping views for a 3.9% gain. TJX also raised its
earnings guidance for the third quarter.
Top retailers such asCostco Wholesale (
), giant department store operatorMacy's (
) and mid-tier department store operatorKohl's (
) also saw nice gains ahead of forecasts.
Off-price retail operatorRoss Stores (ROST) saw a 4% increase
in comps, slightly below forecasts for a 4.3% gain. With
October's performance at the high end of the company's
projections, it raised its earnings guidance for the third
Costco saw a 7% same-store sales gain, also ahead of
forecasts. Macy's saw sales comps rise 4.1%, slightly ahead of
views. Action-sports retailerZumiez (ZUMZ), which reported
Wednesday, saw comps rise only 0.6% vs. a year earlier, well
below forecasts for a 4.5% gain.
Zumiez lowered its guidance for the third quarter based on
October's weak showing.
Michael Niemira, chief economist at the International Council
of Shopping Centers, computes a 5% rise in October same-store
sales vs. a year ago, excluding drugstores.
That compares with a 4.1% gain a year ago and 3.9% in
The showing is also ahead of the fiscal year-to-date
same-store sales growth of 4.7%, excluding drugstores, he
The 5% gain is healthy, he says.
"Overall, it was a good month and certainly a good lead-in to
the holiday season," he said. "But there's plenty of uncertainty
over the next few months, including any lingering effects from
Hurricane Sandy and whatever the decisions are from Congress
regarding higher taxes and reduced federal spending
Niemira says these numbers reflect a "very positive
"I don't see anything that's particularly telling of change,"
he added. "The underlying performance continues to look good and
strong, and the segments that have been strong like luxury
continue to show a lot of strength."
The effect of Hurricane Sandy remains the wild card.
The vicious storm had a limited impact on October's results,
Perkins says, noting that few retailers mentioned it in their
Still, he adds, it may have been a boost to retailers that
sell storm supplies, such asHome Depot (HD) andLowe's Cos.
Then again, it likely hurt apparel retailers because consumers
weren't thinking about updating their wardrobes in the midst of
Niemira concurs Sandy's impact on October sales were "modest."
He says strong pre-storm buying may have possibly given a lift in
certain category sales.
November sales expectations should remain in line with October
results, he adds, with some businesses being affected more
severely by the aftermath of Sandy, but some holiday and
replacement demand kicking in later in the month.
He expects November same-store sales to rise 4.5% to 5.5%,
He sees November-December holiday same-store sales to rise 3%
vs. a year ago, slightly below the 3.3% pop in Christmas
While Perkins expects retailers to see a solid holiday,
Hurricane Sandy's impact remains a big head wind.
The broader issue, he says, is millions of people have been
affected by the storm.
The ripple effect: Hundreds of thousands of dollars in home
damage could result in less money to spend for the holiday.