November Sales Tough
Retail sales in the United States declined 2.7 percent in November, according to the influential New York–based International Council of Shopping Centers. This drop is the first holiday-season sales decline reported by ICSC since it started recording same-store sales results in 1969.
With these weak results, the ICSC revised its forecast for the holiday season’s sales. They range from flat to a 1 percent decline for the whole season, which includes November and December. The ICSC initially predicted an increase of 1.7 percent for the holiday sales months of November and December. Still, Michael Niemira, the ICSC’s chief economist, said retailers would see sales gains in December. He forecast a sales growth of 1.5 percent in the crucial last month of the season.
Despite the low expectations, there are bright spots in this tough holiday. E-commerce retailers reported a 13 percent sales increase during the Thanksgiving weekend, according to Internet market-research company Comscore Inc., based in Reston, Va.
Discount retail giant Wal-Mart enjoyed a good November. Wal-Mart shoppers had more discretionary income because of a decline in gasoline prices, according to a company statement.
Hot Topic Inc. was able to report one of the only other positive financial stories in November. It posted a same-store sales increase of 6.5 percent in November. This news was part of a string of good sales for the mall-based chain. In October, it reported a same-store sales increase of 8.3 percent. Previously, the company had reported same-store sales declines for more than three years. Before October, Hot Topic’s last reported increase was in March 2005.
Hot Topic beat Wall Street forecasts with its November 2008 same-store sales. Liz Pierce, an analyst for Newport Beach, Calif.–based Roth Capital Partners, initially forecast Hot Topic’s sales would decline 1 percent to 3 percent. She credited Hot Topic’s strong showing to teen-agers’ and young adults’ mania over the film “Twilight” and video game “Rock Star 2.” Fans of the film and the game later rushed to Hot Topic to buy related merchandise, according to Pierce.
Hot Topic has improved its merchandise considerably over the past year, and the improvements will translate into more sales gains in the future, Pierce wrote in a Dec. 4 research note. However, she said she believes Hot Topic customers, like many others, will temper their buying after the holiday season is over. —Andrew Asch
