October's same-store sales numbers are in and the results are a bit of a mixed bag. About an equal number of retailers posted gains and declines. Overall, same-store sales for the 30+ retailers that still bother to report monthly figures were up about 1.5 percent give or take a few basis points depending on whose numbers you want to use.
Retailers blamed the results on the fact that October was much warmer than normal, suppressing sales, for example, for things like sweaters, outerwear and other cold-weather items. Many are hoping that November--which is projected to be colder than normal--will unleash pent-up demand for these sorts of items.
Another factor to keep in mind is that same-store comparisons are now against tougher year-over-year comps. The period from September 2008 through August 2009 was marked by low retail sales (although some retailers did benefit from the fact that competitors were put out of business, bolstering their own sales). Therefore the comps that began in September 2009 were against that weak backdrop. The figures that started last month were in comparison with a stronger 12 months than the ones before, especially as the pace of store closures and retailer liquidations slowed considerably. The retail market has been stable for a while now. So there's no more survivor bias to the figures. Now it's just straight comps over the last 12 months without as much noise as a result of the shakeout that began in late 2008.
Going forward, most analysts are projecting a fairly strong Christmas. ICSC, for its part, is saying the November-December selling period will feature same-store gains of between 3.0 and 3.5 percent, making it the strongest year-over-year season since 2006.
My look inside the monthly reports is after the jump.
Kantar Retail recorded a 1.7 percent gain while ICSC estimated that sales rose 1.6 percent and Retail Metrics said sales rose 1.5 percent.
ICSC's tally shows that same-store sales rose 1.6 percent in October
ICSC's numbers are based on 32 retailers. In its monthly report, ICSC wrote:
Unseasonably warm weather again in October was a drag on fall apparel demand. Weather Trends International (WTI) reported that “the country trended the warmest in 15 years” for the fiscal month of October. Numerous retailers discussed this impact on their company's sales. For example, JCP—which reported a 1.9 percent decline in comparable-store sales in October and its largest since April 2010--observed that its sales in its central and northwest regions saw a drag on demand for “certain apparel categories such as sweaters and outerwear” due to the unseasonably warm temperatures.
Overall, ICSC Research figures that industry sales were depressed in October by about 1 percentage point due to the warm weather. The goodon the weather front is that WTI projects that November will be a colder and snowy month--which is a likely catalyst to unleash demand for winter apparel and other seasonal items.
Retailers already are aggressively marketing for the holiday season with a strategy to book sales early. ICSC expects the holiday season (as measured by November and December comparable-store sales) to increase by 3-3.5% this year, making it the strongest season since 2006. Looking to November sales alone, ICSC Research forecasts industry gains of 3-4% as favorable seasonal weather (especially against last year) and early and aggressive holiday marketing and promotions provide an encouraging launch for the 2010 holiday season.
Here are ICSC's monthly same-store sales year-over-year changes, not seasonally adjusted, going back to 1993.
Click to enlarge.
Here is ICSC's index of same-store sales, seasonally adjusted, going back to 1992.
Click to enlarge.
Frank Badillo, senior economist at Retail Forward, said in a statement, “It's not surprising that retail spending eased up in the face of year-ago comparison periods that were tougher for many retailers and warm October weather that discouraged clothing purchases. Improving spending intentions among shoppers should ensure that sales growth does not sag too much as the year-ago comparison periods get even tougher into November and December.”
Retail Metrics, meanwhile, reported that same-store sales increased 1.5 percent.
In its monthly, Retail Metrics wrote:
We would categorize the month, taking the title from Cream's immortal song, as a Strange Brew. Comps were mixed with more tricks than treats on the surprise front as retailers fell short of expectations by 20 basis points and posted their weakest monthly comp since April.
A mix of not catalysts, unfavorably warm weather, a tough macro backdrop, the most difficult year-over-year comparison in 30 months, and consumers taking a breather ahead of the Holiday shopping season resulted in soft sales. One positive note was the generally upbeat 3Q earnings guidance retailers issued as October did not impact the bottom line significantly.