Retail sales fell in November, surprising analysts

Posted Dec 4th 2009 10:15AM by Tom Johansmeyer
Filed under: Wal-Mart (WMT), Costco Wholesale (COST), Abercrombie and Fitch (ANF), Limited Brands (LTD)

Two months of momentum and Black Friday weren't enough to make November a winner for retailers. The holiday shopping season kickoff was up only 0.5% year-over-year, and the month as a whole saw retail sales fall 0.3% year-over-year. As if the drop weren't bad enough, it's a decline on top of last year's November retail freefall, which means we went from bad to worse.

Meanwhile, analysts had expected a strong increase. U.S. government data on retail sales isn't due to be reported until December 11, 2009, and it's expected to be a better indicator of the sector's performance. The data released Thursday doesn't include sales by Wal-Mart (WMT).

Several major retailers posted year-over-year declines in November. Among them were Macy's (M), Children's Place Retail Stores (PLCE) and Abercrombie & Fitch (ANF). Sales at Saks (SKS) dropped precipitously last month. For Target (TGT), strength on Black Friday wasn't enough to compensate for a suboptimal month. Costco (COST), which was up 6% for the month, and Limited Brands (LTD), were among the winners.

Ken Perkins, president of retail research firm Retail Metrics, calls the result "extremely disappointing," continuing that "it is not a good harbinger for things to come." The consumer, he says, is under considerable pressure, and household financial constraints are preventing a recovery in consumer spending.

The International Council of Shopping Centers' 0.3% decline fell far short of the reduced forecast of a 3% to 4% gain. And, it comes a year after November sales were down 7.7%. Of course, methodology makes a difference. Thomson Reuters, which approaches the calculations differently, showed a 0.5% year-over-year increase for November -- and a 7.8% decline from November 2007 to November 2008.

Even with the weakness in November, the ICSC's chief economist, Michael Niemira, isn't backing off from his 1% prediction for holiday sales growth. And, he believes December sales at stores open at least a year will gain 2% to 3%.

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