VOL. 127 | NO. 195 | Friday, October 05, 2012
Retailers Report Slower Sales Growth in September
ANNE D'INNOCENZIO | AP Retail Writer
NEW YORK (AP) – Americans may have slowed their spending in September after splurging during the start of the busy back-to-school shopping season in the month before. But most importantly, they were still spending.
September sales rose 3.9 percent – a slowdown from the 6-percent rise in August – as 22 retailers like Macy's and Costco reported mixed results, according to the International Council of Shopping Centers. Still, given the economic and political uncertainty that weighs on many Americans right now, analysts say the results are an encouraging sign for stores as they head into what's traditionally the busiest shopping period of the year in November and December.
"This should set up to be a good holiday season," said Ken Perkins, president of Retail Metrics LLC, a research firm.
Retailers' monthly sales figures are based on revenue at stores opened at least a year. That measure, which is considered to be an indicator of a retailer's health because it excludes results from stores recently opened or closed, offers insights into how Americans are spending during the slow economic recovery.
But only a handful of merchants representing about 13 percent of the $2.4 trillion U.S. retail industry report monthly revenue. And that list is dwindling: Target Corp. on Thursday said that it will no longer report monthly figures starting next year.
Target was among those retailers reporting results that fell short of analyst expectations. The discounter said its sales gain of 2.1 percent was slightly below analysts' expectations as shoppers picked up back-to-school items and groceries. Department-store chain Macy's also posted a 2.5 percent increase last month that was below the gain of 3.3 percent analysts polled by Thomson Reuters had expected. Meanwhile, Costco Wholesale's 5.7 percent gain put it among the merchants that posted results that beat Wall Street estimates.
September's results offer hope for retailers as they head into the winter holiday shopping season, a two-month period in which they can make up to 40 percent of their annual revenue. It's the latest sign that consumers are feeling a little better about the economy. That's important because consumer spending accounts for 70 percent of economic activity.
Right now, confidence is at a seven-month high as people are feeling better about rising home prices and a rebounding stock market. Still job growth remains weak and prices for everything from food to gas are higher. On top of that, there's a worry that the U.S. economy will fall into another recession next year. That's when tax increases and deep government spending cuts will take effect unless Congress reaches a budget deal.
"If (Congress) can get their act together, it will be good for the consumer's psyche," said Michael P. Niemira, chief economist at International Council of Shopping Centers, an industry trade group. "If they don't, I think you could see problems. It could affect high-end spenders and the general confidence on the economy."
Mary Mastenbrook, a 58-year-old who lives in Schaumberg, Ill., says she will be closely watching how the budget battle plays out. She bought a flat-screen TV last month at Abt Electronics, but she's not sure how much she will be spending for the winter holidays.
"If things are not clear, we are going to temper what we're going to spend," a homemaker whose husband is a defense contractor. "You can't spend a lot if you don't know whether your job is secure."
Because of economic and political uncertainty, The National Retail Federation, the nation's largest retail trade group, has tempered its expectations for the winter holidays. The group said this week that it expects sales for the November and December period to rise 4.1 percent.
That's more than a percentage point lower than the growth in each of the past years and the smallest increase since 2009 when sales were up just 0.3 percent. But the forecast still is higher than the 3.5 percent average over the past 10 years.
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