October '08 Sales Tough
Retailers generally reported poor performances in October, and many economists used strong language to describe the state of retail in the past month.
“The October retail environment was simply awful,” said Michael Niemira, chief economist of the New York–based International Council of Shopping Centers. Retail sales declined 0.9 percent, according to the ICSC’s index of national retailers.
Many economists and businesspeople have been expecting some hard times for retail. The fallout from the meltdown of the financial markets has continued to disturb the national economy, and it has resulted in a sharp drop in the level of consumer confidence, according to New York–based The Conference Board, which publishes a monthly consumer-confidence index. Conference Board Director of Research Lynn Franco said consumer confidence dropped to an all-time low in October, falling to 38.0, down from 61.4 in September.
The onslaught of bad economic news convinced retail analyst Jeffrey Van Sinderen that many businesses will have to tough out a hard holiday season. “Companies really have to keep balance sheets strong, control inventory and get through this difficult period,” Van Sinderen said. “These are unprecedented times. Eventually, it will turn around, but we don’t know when.” Van Sinderen works for Los Angeles–based B. Riley & Co.
A handful of companies had good news in October. The long-suffering Hot Topic reported an increase in its net sales of 11.6 percent. Retail analyst Liz Pierce of Roth Capital Partners said the increase was not only a result of Halloween, one of Hot Topic’s top sales seasons, landing on a Friday, but it also was a result of the retailer selling a compelling merchandise mix. Urban Outfitters Inc. reported a 10 percent increase in its October same-store sales. American Apparel said its stores experienced an increase of 22 percent in October.
Discounter Wal-Mart was also one of the lucky few to report positive same-store sales in October. Wal-Mart U.S. President Eduardo Castro-Wright said its customer traffic has increased in the past month. “Highly competitive prices, especially on basics throughout the store, are driving these results,” he said.
Retailers with aspirational price points, such as luxury department stores, were hit hard. Dallas-based Neiman Marcus reported a sharp decline of 26.8 percent in its same-store sales. Specialty stores did not fare much better. Fort Myers, Fla.–based Chico’s experienced a decline of 13.4 percent. San Francisco–based Gap reported a decline of 16 percent.
ICSC’s Niemira forecast a tough holiday. ICSC announced it would hedge its holiday outlook to the lower range of its forecast. “We anticipate that industry sales will grow by 1 percent for November and December,” Niemira said. —Andrew Asch
