Retailers post sluggish sales for November

updated 12:33 p.m. ET Dec. 6, 2007

NEW YORK - The holiday shopping season got off to an uneasy start as consumers took advantage of big Thanksgiving weekend discounts and then pulled back, leaving retailers with mixed sales results for November.

As retailers reported their sales results Thursday, warehouse club operators like Costco Wholesale Corp. and discounter Wal-Mart Stores Inc., which were able to keep crowds coming with special offers, proved to be winners. But plenty of others, particularly mall-based apparel stores including Limited Brands Inc. and teen retailer Wet Seal Inc., had disappointing results.

Wal-Mart rival Target Corp. warned that it may not be able to meet its fourth-quarter earnings projections if sales don’t significantly improve after falling off the final week of November following a solid showing over Thanksgiving weekend.

Department stores Macy’s Inc. and Nordstrom Inc. reported robust sales, but that was mostly due to a quirk in the calendar that resulted in an additional week after Thanksgiving falling into the month of November compared to December last year.

“Those retailers that did a lot of promoting were able to drive traffic not just on Black Friday but through the following week,” said Ken Perkins, president of RetailMetrics LLC, a research company in Swampscott, Mass. Still, he added, “consumers are still facing the same old economic headwinds.”

The UBS-International Council of Shopping Centers tally of 43 retailers posted a 3.5 percent gain in same-store sales in November, but excluding the calendar shift, Michael P. Niemira, chief economist, said the tally would have been up 2.5 percent.The tally is based on sales or sales at stores opened at least a year, and are considered the key reason for a retailer’s health.

November’s pace, helped by colder weather, was better than retailers’ performance in September and October which averaged about a 1.6 percent gain, but was also in line with the less than robust 2.4 percent pace seen since Febuary, the start of the retail calendar year.

Analysts say it is best to look at the combined November-December figures to get a better picture.

Holiday Retail 2008 Stores may see bleak Black Friday sales After pushing steep discounts throughout November that are usually reserved for the day after Thanksgiving, retailers are offering even bigger cuts and promotions for Black Friday. Newsweek: Annual guide to best holiday gifts In tough times, layaway makes a comeback   Today Show: Save on holiday shopping ConsumerMan: Stretch your holiday budget Newsweek: Can you afford Christmas this year?

“In many respects, it is the same story, and the worries are the same,” said Niemira.” There is still unease throughout the industry.”

With Christmas about three weeks away, the retail industry is struggling with consumers’ eroding confidence and a weak sales trend amid mounting problems in the economy. Shoppers have been faced with higher gas and food bills and slumping value of their homes. Tighter credit has also become an issue.

The one bright spot is that the job market has held up. Analysts are awaiting Friday’s employment report from the Labor Department, and are looking for clues as to whether the Federal Reserve will feel the need to cut interest rates again to keep the economy out of a recession.

On Thursday, the department reported a 15,000 drop in the number of first-time jobless benefits claims made last week, a sign of fewer layoffs. However, analysts noted there is a great deal of volatility in jobless claims around holiday periods.

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