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Holiday Shopping Season Off to Torrid Start

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After a rough October, same-store sales rebounded strongly in November, setting a promising tone for the all-important holiday shopping season.

Same-store sales surged by about 6.0 percent year-over-year--almost doubling the 3.6 percent gain analysts had expected. In contrast, same-store sales in November 2009 declined 0.2 percent compared with the year prior.

The one caveat to the numbers is that the sales were highly driven by promotions and discounts and retailers may need to keep offering deals to continue to drive sales. Anecdotally, it also appears that consumers are completing holiday shopping earlier this year than in years' past. Many shoppers responded to pre-Black Friday discounts, which helped boost sales in the early part of November and then there was another buying spree when the Black Friday deals arrived. As as result, it's possible that more holiday shopping as a whole has already occurred than in past seasons, which means December's gains may not be as robust as what we've seen so far.

Going forward, ICSC, is projecting December same-store sales to rise between 3.0 percent and 3.5 percent, but expects the overall holiday sales number to be between 0.5 percent and 1.0 percent higher than its original estimate of a gain between 3.0 percent and 3.5 percent.

Additional details on the same-store figures are at Reuters, CNN and the Wall Street Journal.

My look inside the monthly reports is after the jump.

Kantar Retail recorded a 6.0 percent gain while ICSC estimated that sales rose 5.8 percent and Retail Metrics said sales rose 5.3 percent.

ICSC's tally shows that same-store sales rose 1.6 percent in October

ICSC's numbers are based on 31 retailers. In its monthly report, ICSC wrote:

The November performance was strong across most segments and was helped by a confluence of factors, including easy comparisons (back‐to‐back November declines in 2008 and 2009), colder‐than‐normal weather, early promotions, aggressive post‐Thanksgiving marketing and a recovering economy.

The discount segment of the industry posted a strong 4.9% gain in comp‐store sales in November,

which was its strongest monthly gain since March 2010 (10.7%) and far outpaced its fiscal year‐to‐date performance of 2.6%. Target's CEO observed that his company's November sales were better than expected, driven by very strong guest traffic throughout the month.

Retailers also were encouraged by Black Friday weekend sales as reflected by TJX's CEO, who described her company sales as brisk and customer traffic continued to be up over strong increases last year. JC Penney described its holiday start as off to a strong start with the biggest Black Friday sales event in its history. Macy's CEO opined that his company had particularly strong Black Friday weekend sales, which bolstered his company's confidence for the holiday season.

Here are ICSC's monthly same-store sales year-over-year changes, not seasonally adjusted, going back to 1993.

Click to enlarge.

icsc-same-store-11012010

Here is ICSC's index of same-store sales, seasonally adjusted, going back to 1992.

Click to enlarge.

icsc-sales-index-11012010

According to Kantar Retail, sales-weighted same-store sales increased 6.0 percent in October for the 30 retailers that reported numbers. (A pdf with each retailer's results can be downloaded here.)

Frank Badillo, senior economist at Retail Forward, said in a statement, "Shoppers have been shaking off their recent cautiousness about spending and any last doubts may have been removed by all the great deals that came early and often in November. The rest of the holiday looks positive given shoppers' spending plans, but they will no doubt be looking for more big promotions to sustain this kind of spending pace.

In addition, Kantar Retail's ShopperScape survey indicates further bullishness among consumers, providing further evidence that the holiday shopping season should be strong.

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Retail Metrics, meanwhile, reported that same-store sales increased 5.3 percent compared with its precition of 3.5 percent. It was the 14th straight monthly gain.

In its monthly commentary, the firm wrote:

Aggressive promotions, improving employment conditions and consumer confidence, favorable weather, release of some pent-up demand, and a strong Black Friday weekend drove the best monthly comps since Easter aided March 2010 when comps rose 8.7%. November same store sales rose by 5.3%, handily beating raised expectations by 1.8%, the biggest upside surprise since March.

Click to enlarge.

retailmetrics-11012010

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Elaine Misonzhnik

Senior associate editor Elaine Misonzhnik has been writing for National Real Estate Investor since June 2006 and has covered commercial real estate for more than 12 years. She first became...
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