Retail sales slump in November

posted at 10:12 am on December 4, 2009 by Ed Morrissey

Retailers need a big boost in sales in the final two months of the year for a large chunk of their annual profits, but November turned out to be  bust — thanks to a disappointing Thanksgiving weekend.  Retail sales had actually edged up slightly in September and October, but fell in November.  Discounters eked out an increase, but department store sales fell 4.5%, signaling a bleak Christmas:

About 30 national chains reported monthly sales at established stores on Thursday, a key measure of the industry’s health. Several chains, including Costco and J.C. Penney, performed worse than analysts expected. Retailers said that unseasonably warm weather dampened sales at the beginning of the month. In addition, shoppers saved their cash for post-Thanksgiving deals. …

The ICSC showed that same-store sales — which measures results at stores open at least a year — fell 0.3 percent in November from a year ago, reversing two months of solid growth. Department stores fared the worst, plunging 4.5 percent. At Macy’s, where sales dropped 6.1 percent, executives said they expect some of November’s sales to shift to December because of changes to its promotional schedule and because December includes an extra selling day. Still, the company acknowledged that traffic the weekend after Thanksgiving was weaker than expected despite a strong Black Friday.

The post-Thanksgiving shopping bonanza is the traditional kickoff for holiday sales, and the November results gave the first hint of how the crucial season will fare. Frank Badillo, a senior economist at Retail Forward, said the figures show consumers are beginning to loosen their purse strings — but only for a deal. About 43 percent of shoppers plan to spend less this holiday season, a smaller percentage than last year but substantially more than in 2007, according to the consulting firm. Badillo said consumers are holding fast to their newfound frugality even as some sectors of the economy begin to show signs of life. …

Discount stores once again performed better than other retail sectors, pulling off a 0.6 percent increase in November sales, according to ICSC. TJX, which owns TJ Maxx and Marshall’s, jumped 8 percent, while Kohl’s sales rose 3.3 percent.

The good news is that retailers spent the last year downsizing — and yes, that’s the good news.  Poorly-performing locations have already been closed, so most retailers won’t have to downsize at the end of a lackluster holiday season, or at least not too much.  They don’t have much more to cut, not without hurting their top-line numbers in 2010 and taking themselves out of position to benefit from a recovery.  As one analyst tells the Post, the bottom line (profit) will look better than the top line (sales figures), but that doesn’t mean the bottom line will look good.

Clearly, though, the recovery has not happened yet — or to be more accurate, the recovery has done nothing to build consumer confidence.  Those with money have decided to hold onto more of it rather than spend carelessly.  The 0.6% increase at discounters year-on-year is based on a truly terrible 2008, and 0.6% doesn’t even cover the increased cost of energy in transportation for the distribution chain that gets the goods to market.  The emphasis may have shifted to bargain-hunting, but comparing the numbers shows that bargain-hunting hasn’t come close to making up for the drop in sales at other retailers.

People aren’t spending money as they normally do at this time.  They do not seem to have much confidence in the so-called recovery, and they’re looking at a future of higher taxes and higher residual unemployment.  While those remain reality, expect the consumer economy to drag seriously for the next several months, if not much, much longer.


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Comments

Funny,

Slappy didn’t mention any of this, while he was patting himself on the back this morning,

isn’t it.

franksalterego on December 4, 2009 at 2:43 PM

Well thank Gaia that there will be fewer obscene profits this year.

mankai on December 4, 2009 at 10:51 AM

Hear, Hear! So well put, so elegant, that I simply have to screw it up by adding alot of unnecessary words….to wit….

This is exactly what barry keeps insisting he wants….lower profits, less money in the fat pockets of the evil “rich”, whom he doesn’t even consider to be human anyway (unless they contribute vast sums to him and other democrats).

Never mind that these same rich people are the only people who could ever actually hire someone, ANYONE, to do any job at all. The only reason the govt can hire idiots like barry is that someone else produced something, turned a profit, and had it forcibly stolen by the govt!

runawayyyy on December 4, 2009 at 3:03 PM

runawayyyy on December 4, 2009 at 3:03 PM

Whenever I lose my senses and get into a debate with a lib about this I ask him/her 2 simple questions:

Have you ever worked for a rich person before? Have you ever worked for a poor person before? And then leave it at that for them to figure it out.

angryed on December 4, 2009 at 3:31 PM