Major retailers such as Kohl's, Target and Macy's on Thursday reported weak sales in November as a strong start the holiday shopping season over the Thanksgiving weekend wasn't enough to fully offset a slow start to the month caused by Superstorm Sandy.
The storm stunted enthusiasm among shoppers early in the month just as stores were preparing for the busiest shopping period of the year, a roughly two-month stretch in November through December when they can make up to 40 per cent of their annual revenue during the last two months of the year.
"It really took away the punchbowl for retailers and put them behind the eight ball heading into the crucial weekend," said Ken Perkins, president of RetailMetrics, a research firm
Eighteen retailers reported that November sales at stores open at least a year — an indicator of a retailer's health — through last Saturday were up 1.7 per cent compared with the year-ago period, according to the International Council of Shopping Centers. That's well below the anticipated forecast for a 4.5 per cent to 5.5 per cent gain.
Only a small group of chain stores representing about 13 per cent of the $2.4 trillion U.S. retail industry report monthly revenue. The list excludes Wal-Mart Stores Inc., the world's biggest retailer. But the data still offers a snap shot of consumer spending, which accounts for 70 per cent of all economic activity.
Thursday's reports show that stores were still reeling from the impact of Superstorm Sandy, which hit the Northeast on Oct. 29. Sandy disrupted business activity and households, with people losing power and stores including Macy's and Saks closing Northeast stores for several days. Advisors' SpendingPulse, which tracks spending across all payments, including cash, said that Sandy knocked off nearly $4 billion of retail sales the first week in the hard-hit Mid-Atlantic and Northeast region, which accounts for 24 per cent of retail sales nationwide.
The disappointing November sales releases dampened the enthusiasm fueled after reports of strong spending over the Thanksgiving weekend. A record 247 million shoppers visited stores and websites over the four-day weekend starting Thanksgiving, up 9.2 per cent of last year, according to a survey of 4,000 shoppers that was conducted by research firm BIGinsight for The National Retail Federation trade group. Americans spent more too: The average holiday shopper spent $423 over the entire weekend, up from $398. Total spending over the four-day weekend totalled $59.1 billion, up 12.8 per cent from 2011.
November's results seem to affirm that this holiday season could be a difficult one for stores. The National Retail Federation estimates that overall sales in November and December will rise 4.1 per cent this year to $586.1 billion. That's more than a percentage point lower than the growth in each of the past two years, and the smallest increase since 2009, when sales were nearly flat.
For November, Target reported that revenue at stores opened at least a year fell 1 per cent, hurt by weak sales in the first two weeks of the month. Analysts surveyed by Thomson Reuters had expected a 2.1 per cent rise. Target said weak sales early in the month offset stronger sales later. The South was its strongest region, while the Northeast, hard hit by Sandy, was weaker.
Macy's, a Cincinnati department store chain, also said the storm hurt sales for the month. Macy's said its revenue at stores open at least a year fell 0.7 per cent. Analysts had expected a 1.5 per cent increase.
"Despite the largest-volume Thanksgiving weekend in our company's history, we were not able to overcome the weak start to the month, which included the disruption of Hurricane Sandy," said Terry J. Lundgren, Macy's chief executive. "Yet we remain on track to deliver a very strong sales performance in the fourth quarter, consistent with our guidance."