October '05: Economy Strong Despite Devastation From Hurricanes
The United States reeled from the fury of hurricanes Katrina, Rita and Wilma during the months of September and October. Still, October’s retail sales grew 4.4 percent over the same period last year. Economist Michael Niemira, of the New York–based International Council of Shopping Centers, was pleasantly surprised at the strong performance but continued to be wary of turbulence on the economy’s horizon.
“[The performance] suggests to retailers that consumers are buying, and there is a core level of demand,” Niemira said. “Yet there’s still the worry of consumer fundamentals.”
For example, the high price of fuel continues to be a heavy burden for many consumers. It may be one of the reasons why two recently published surveys reported consumers planned to spend less during the Holidays. The Experian-Gallup Personal Credit Index published a survey Nov. 2 that found that one-third of those asked said they would spend less this Christmas season than last.
The American Affluence Research Center, based in Aventura, Fla., published a survey last month that said 21 percent of the wealthiest households in the United States are planning to trim their Holiday gift purchases slightly this season. A separate survey, published Oct. 18 by the Washington, D.C.–based National Retail Federation, found that there could be an overall increase in spending of 5 percent for this Holiday season.
The teen and luxury retail segments reported strong performance during October, as they have during much of the last 24 months. Dallas-based Neiman Marcus reported comparable-store sales of 7 percent. Teen retailer The Wet Seal Inc., based in Foothill Ranch, Calif., reported high same-store sales of 46.6 percent. Anaheim, Calif.–based Pacific Sunwear had solid October same-store numbers of 7.9 percent.
The retail engine slowed for Brisbane, Calif.–based Bebe Stores Inc. after one year of enjoying same-store sales in the high double digits. In October, it reported low single- digit same-store sales of 2.1 percent.
Bebe’s decrease was no surprise, said Jeffrey Van Sinderen of B. Riley & Associates of Los Angeles. He said Bebe’s Fall selection of tops did not sell as well as expected.
Also, the company might be a victim of its own success. It’s hard to consistently equal or surpass comparable-store sales as stellar as Bebe’s have been in the last 12 months, Van Sinderen said. —Andrew Asch
