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VOL. 36 | NO. 43 | Friday, October 26, 2012
Retailers' gains in October could hurt holidays
NEW YORK (AP) — Americans spent briskly in October before Superstorm Sandy hit the Northeast at the tail-end of the month. But the question is whether they're still willing to buy an iPhone for Christmas if they plunked down hundreds on a generator for Sandy?
The storm, which hit the East Coast on Monday, did not appear to negatively impact sales during the month: Twenty-one retailers from club operator Costco to department store Macy's reported that sales in October through last Saturday were up 5 percent compared with the year-ago period, according to the International Council of Shopping Centers, beating the trade group's estimate growth of 3.5 percent to 4.5 percent.
Still, analysts worry that the strong sales in October could spell trouble for the upcoming holiday shopping season in November and December, a time when many retailers make up to 40 percent of their annual revenue. They fear that many Americans who bought generators, bottled water and other emergency and cleanup supplies before and after the storm will be less inclined to spend over the holidays.
Michael P. Niemira, chief economist at the international shopping center trade group, said the sales reports give reason to be optimistic, however, there still are "considerable uncertainties."
"We'll see any negative impact from Sandy in coming weeks," he said.
At a time when retailers are dealing with a slow economic recovery and uncertainties related to the presidential election on Tuesday, Sandy is just an addition to the list of challenges they face. Few retailers offered details Thursday on how their sales were affected by Sandy, which for days disrupted business activity from North Carolina to Maine with many retailers closing stores due to power outages, flooding and other issues.
So far, the effects of the storm are expected to be a wash. Home improvement chains and food stores are expected to benefit, while sales at department stores, clothing retailers and others that sell discretionary items likely will suffer. But with many closed stores just starting to reopen, analysts expect the full effects of the storm to spill over into the first week of November.
Even October's sales reports don't give a complete picture for that month. Only a handful of retailers representing about 13 percent of the $2.4 trillion U.S. retail industry report monthly results, which are based on revenue at stores opened at least a year. And the list excludes home improvement chains like Home Depot, the world's biggest retailer Wal-Mart Stores Inc., and other stores that might have been impacted by the storm.
Home Depot, based in Atlanta, would not discuss sales figures on Thursday, but said its stores have been busy as one would expect. About 44 of Home Depot's 2,200 stores were closed on Monday when the storm approached, but by Thursday, only two locations in New York City remained closed.
"From a few days before the storm until now we're moving in trucks all the time with products to make sure that stores stay replenished," said spokeswoman Paula Drake.
Officials at Macy's, a New York-based chain that generates 8 percent of its annual revenue from its New York City stores, said Thursday that they're hopeful that the retailer will recoup some or most of its lost sales from the storm during the remainder of the fourth quarter. More than 200 Macy's and Bloomingdale's stores were closed for some period of time, ranging from a few days to multiple days as a result of the storm.
Macy's said sales increased 4.1 percent in October, up from the 2.9 percent increase Wall Street had expected. And Macy's raised its guidance for revenue at stores opened at least a year for the second half to 4 percent, up from its original estimate of 3.7 percent.
"Business was strong in October," said Terry J. Lundgren, chairman, president and chief executive officer of Macy's in a statement. "We are feeling confident about our prospects for the upcoming holiday season ... despite the interruption caused by Hurricane Sandy in the first few days of the fourth quarter."