Retail Comps Crash in October
James Mammarella -- Home Textiles Today, November 17, 2008
October comparable store sales were negative for 12 of the 15 retailers tracked monthly by Home Textiles Today — and home was weak across the board.
Only Wal-Mart, Sam's Club and Fred's showed positive comps for October, and they were modest at that. Double-digit comp drops were registered square in the middle of the market, at Gottschalks (-13.4%), JCPenney (-13.0%), Stein Mart (-12.5%), and Bon-Ton (-11.1%).
The bad tidings were also felt at Kohl's and Dillard's, where comps fell 9% and 8% respectively — and at Macy's Inc., which posted monthly results (comps down 6.3%) for the first time this fiscal year, and made all its monthly comps available online.
It turns out that Macy's has recorded negative comps each month this year except April, where an Easter calendar shift helped bump up same-store sales by 3.0%. Quarterly, Macy's showed a 2.6% comp fall in the first quarter, followed by a 2.1% comp drop in the second quarter and now a 6.0% comp fall in the third quarter. This translates to a 3.5% comp drop year-to-date, as overall sales have contracted by 4.3%.
JCPenney said that relative strength in apparel categories "was offset by continued softness in sales performance in the home and fine jewelry divisions." JCP added, "These categories negatively impacted store sales as well as catalog and internet performance, for which home merchandise comprises a significantly greater proportion of sales than in stores."
JCP did note that it moved the "Biggest Sale of Them All" into November this year, thus is looking for some improvement to the month's comps.
Management at the 1,093-unit department store chain had already factored in the general negativity, and adjusted its previous Q3 EPS guidance from 50-60 cents to 53-55 cents — including a 2-cent per share benefit from a real estate sale.
"Decorative home and garden, entertainment, and domestics" were the weakest departments at Target, the retailer stated in a recording detailing its overall comp fall of 4.8% in October. "The home assortment experienced a low double-digit decline," weaker than the apparel segment at Target — while "non-discretionary, healthcare and food categories" sustained low- to mid-single digit comp gains.
Home remains down in the dumps at Wal-Mart, even as vast price cuts keep the register ringing.
"Customer comparable traffic is higher and our seasonal merchandising events are delivering improved sales," said Eduardo Castro-Wright, Walmart U.S. president and ceo. "Highly competitive pricing, especially on basics throughout the store, is driving these results."
He added, "We see more customers shopping more often at Walmart. Customers see that we are broadening the price gap against our competitors."
Performance at Sam's was driven by consumables; the company stated, "Weaker categories included electronics, jewelry and home-related products."
Wal-Mart did suffer one accounting setback — as did Costco, TJX and other chains with significant overseas businesses. The U.S. dollar spiked upward during October, a factor that turned a 9% comp gain in Costco's international division, for example, into a 10% comp drop once currency exchange rates were taken into account for the warehouse club's operations in Canada, the U.K. and South Korea.
As a result, Costco settled for a 1% comp decline in October; TJX posted an unusual 6.0% comp drop.
Touchy about its financial image in the wake of widespread rumor-mongering, 281-store Bon-Ton stated, "We ended October with excess borrowing capacity under our revolving credit facility of $214 million, well above the $75 million covenant."
Bon-Ton vice chairman and president-merchandising Tony Buccina added, "We ended the month with comparable store inventories down 9% from the prior year."
In a broader retail measure, the 40-company Johnson Redbook Same-store Sales Index fell 1.5% in October. Two-thirds of the merchants registered negative comps — including 14 companies that posted double-digit comp drops. Discounters in the Index eked out a comp gain of 0.8%, while department stores posted a comp crash of 11.2% — by far the worst monthly performance by the segment in more than a year.
October Sales for Key Retailers
Four weeks ended November 1a(dollar amounts in millions)
|2008 sales||2007 sales||Total % chg.||Same-store % chg.|
|a. Reporting periods vary from chain to chain.
b. Costco: 4 weeks and 9 weeks ended November 1.
c. Duckwall-ALCO: 4 weeks and 39 weeks ended November 2.
d. JCPenney: comps for stores only; no longer breaks out direct-to-consumer sales.
e. Wal-Mart: 4 weeks and 39 weeks ended October 31; Int'l not included in comps.
|The Bon-Ton Stores||$218.4||$244.7||(10.7)||(11.1)|
|Dillard Dept. Stores||$406.0||$444.7||(9.0)||(8.0)|
|J.C. Penney d||$1,361.0||$1,543.0||(11.8)||(13.0)|
|Wal-Mart Stores Inc. e||$28,565.0||$27,920.0||2.3||2.5|
|The Bon-Ton Stores||$2,098.6||$2,227.0||(5.8)||(6.3)|
|Dillard Dept. Stores||$4,762.2||$5,043.1||(6.0)||(6.0)|
|Wal-Mart Stores Inc. e||$291,937.0||$269,638.0||8.3||3.4|
Winners and Losers
Same-store sales % change
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