Signs of a Slow Christmas for Retailers

Signs that the US consumer are reigning in their spending is seeping into retailers reports. October same stores sales growth showed that 7 out of 10 retailers missed analysts forecasts. From Bloomberg.com:

U.S. Retail Sales in October Trail Analyst Estimates

Sales at Wal-Mart Stores Inc., Macy's Inc. and other U.S. retailers trailed analysts' estimates last month after record-high temperatures in the Northeast reduced demand for jackets and sweaters.

Seven out of 10 retailers reported sales below forecasts, according to Retail Metrics LLC. A 4.2 percent drop in the average U.S. home price in September and gasoline prices that are one-third higher than a year ago buffeted consumers, raising concerns that spending may slow as the holidays approach....

U.S. October retail sales increased 1.6 percent, the worst for October since 1995's 0.2 percent increase, the International Council of Shopping Centers said today. The results, based on 44 chains, missed the New York-based group's 2 percent forecast and suggest a slowdown in holiday spending.

About 30 percent of retailers' annual profits occur in the three months through January, according to ICSC Chief Economist Michael Niemira. The group has forecast November and December sales to gain 2.5 percent, the slowest in three years. The National Retail Federation anticipates the smallest holiday sales increase in five years.

"Consumers are slowing down, being more discretionary in their purchases, and retailers are going to have to be promotional,'' said Lauri Brunner, a retail analyst at Thrivent Investment Management in Minneapolis, which has $70.6 billion in assets. "The promotions are starting earlier and earlier.''

The above table comes from Minyanville and tells the story for retailers in October. The accompanying post by Jeff Macke is well worth a read for commentary on some of the major names in the retail space.