Stores' business better than expected, except Wal-Mart
Retail sales in September were up about 4 percent.
NEW YORK (AP) -- Shoppers encouraged by cooler temperatures and falling gas prices went on a clothes shopping spree in September, giving many retailers better-than-expected gains and lifting the industry's spirits two months before the holiday season. A notable exception was Wal-Mart Stores Inc.
As retailers reported their results Thursday, the department stores and teen merchants including Abercrombie & amp; Fitch Co. Inc., J.C. Penney Co. Inc. and Saks Inc. were among the leaders. The robust gains prompted many retailers to raise their third-quarter earnings outlook.
The laggards again included Gap Inc. and Pier 1 Imports Inc., whose sales continue to languish.
Nonetheless, "this is a really strong month," said Ken Perkins, president of RetailMetrics LLC, a research firm in Swampscott, Mass. "The back-to-school momentum was strong, weather was really favorable and the big plummet in gasoline prices certainly put more disposable money into consumers' wallets."
Braced for slowdown
The news was encouraging because analysts had braced for a consumer spending slowdown in the second half of the year as the economy cooled. But consumers have remained resilient.
The International Council of Shopping Centers-UBS index of retail sales was up 3.8 percent in September, but excluding Wal-Mart's results, the tally rose a robust 6.0 percent. The index is based on same-store sales, those from stores open at least a year; they are considered an accurate measure of a retailer's health.
While September's sales pace matched the average same-stores gain during retailer's fiscal period so far, the tone of the merchants' reports was much more upbeat than in previous months.
"Right now, we are in a sweet spot for spending," said Michael Niemira, chief economist at the ICSC.
But the deteriorating housing market remains a big concern. In the past few years, booming home sales and record low interest rates spurred spending as consumers tapped into their rising home equity.
Job market concerns
Meanwhile, though the Conference Board last week reported a rebound in consumer confidence in September, the survey showed lingering concerns about the job market. Employment showed modest gains in August, with wages barely up, and analysts are forecasting only a modest increase of 120,000 jobs for September. The Labor Department reports that figure today.
Still, declining gasoline prices, which have fallen 50 cents a gallon in recent weeks, should help ease concerns about the job market. Economists had worried that rising energy costs would derail the labor market as companies look to cut costs by laying off workers.
Wal-Mart sales pale
Wal-Mart, the world's largest retailer, which has blamed soaring gas prices for slowing sales, didn't benefit from lower prices at the pump last month. It said its same-store sales rose 1.3 percent, well short of the 2.1 percent expected by analysts surveyed by Thomson Financial. The company said its sales, which were measured against September 2005 figures, paled in comparison because the year-earlier results were bloated by a rush of pre- and post-hurricane shopping.
Wal-Mart had lowered its own same-store projection to 1.3 percent from 1.8 percent, saying it had miscalculated its sales figures.