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Economy, Hurricanes Spoil September

Retailers did not fare well in September, and home departments in general failed to break out of the year-long doldrums.

Food, consumables, health and wellness — and children's clothing — were the categories Wal-Mart said were "strong" or "positive" in U.S. stores during the five-week retail month. Home departments were not mentioned.

Overall corporate sales at Wal-Mart were up 5.8% to $36.2 billion. Sales at U.S. Wal-Mart stores rose 4.8% to $22.8 billion, with a very modest comparable-store gain of 2.0%. The comp gain at Sam's Club was a robust 7.4%, yielding a 2.8% comp gain in the United States.

Target saw sales rise 2.5% to $5.32 billion, but comps slipped 3.0%. President and ceo Gregg Steinhafel said results were "below our expectations" and played it safe on projections: "On balance, we currently expect 2008 full year earnings per share to meet or exceed last year's full year EPS of $3.33."

JCPenney saw volume drop 10.9% in September to $1.45 billion, with comparable-store sales down 12.4%. The big mid-tier retailer cut its third-quarter outlook from 70-75 cents per share to 50-60 cents per share.

Kohl's sales edged up 0.6% to $1.34 billion, while comps fell 5.5%.

Sales of $299.4 million were off 2.7% at Bon-Ton; comps fell 4.6%. The 281-store department store retailer did manage a positive comment on home textiles. Tony Buccina, vice chairman and president - merchandising, said, "As the weather became more seasonal, categories such as outerwear, cold-weather accessories, boots and seasonal soft home posted strong results."

Department store operator Dillard's recorded a sales slide of 12% (comps fell the same amount) to $568.5 million. The company allayed about one-fourth of that decline to the effects of Hurricanes Gustav and Ike.

Specialty chain Stein Mart reported a sales falloff of 11.9% to $112.0 million, and a comp drop of 14.8%. The company cited "gifts and linens" as the month's "most challenging businesses." Stein Mart, a 280-unit Southeastern retailer, said it "lost a total of 111 store selling days" due to the effects of the two hurricanes.

Membership warehouse club Costco — clearly one of the winners throughout 2008 — reported a 10% sales gain to $6.67 billion for the month (which is the first in its 2009 fiscal year), and a comp gain of 7%.

Both major off-pricers, TJX Cos. and Ross Stores, reported a rare comp drop, off 1% at TJX and 2% at Ross.

For its part, Family Dollar, which began its new fiscal year in September, has elected to cease monthly sales reports in favor of quarterlies.

Overall, the department store sector posted its worst month since March (due to the Easter holiday shift) as measured by the Johnson Redbook Same Store Sales Index (SSI), which showed a September 9.8% comp decline for the sector; the drop in March was 10.7%. Discounters, too, with a September comp gain of just 1.0%, had their worst mark as a group since March.

The 39-retailer SSI edged up 0.6% in September, following the 1.4% gain in August and a 2.1% rise in July.

September Sales for Key Retailers
Five weeks ended October 4a(dollar amounts in millions)

2008 sales 2007 sales Total % chg. Same-store % chg.
a. Reporting periods vary from chain to chain.
b. Costco: 5 weeks ended October 5.
c. Duckwall-ALCO: 5 weeks and 35 weeks ended Oct. 5; comps do not include fuel sales.
d. JCPenney: comps for stores only; no longer breaks out direct-to-consumer sales.
e. Wal-Mart: 5 weeks and 35 weeks ended Oct. 3; Int'l not included in comps.
The Bon-Ton Stores $299.4 $307.9 (2.7) (4.6)
Costco b $6,670.0 $6,050.0 10.0 7.0
Dillard Dept. Stores $568.5 $649.2 (12.0) (12.0)
Duckwall-ALCO c $43.2 $40.5 6.6 (5.3)
Fred's $161.3 $161.1 0.1 1.1
JCPenney d $1,446.0 $1,622.0 (10.9) (12.4)
Kohl's Corp. $1,335.8 $1,327.2 0.6 (5.5)
Ross Stores $561.0 $537.0 5.0 (2.0)
Stein Mart $112.0 $127.2 (11.9) (14.8)
Target Corp. $5,320.0 $5,190.0 2.5 (3.0)
TJX Cos. $1,830.0 $1,780.0 3.0 (1.0)
Wal-Mart Stores Inc. e $36,229.0 $34,231.0 5.8 2.8
Wal-Mart Stores $22,482.0 $21,447.0 4.8 2.0
Sam's Club $4,391.0 $4,066.0 8.0 7.4
International $9,356.0 $8,718.0 7.3 NA
35 WEEKS
The Bon-Ton Stores $1,880.1 $1,982.3 (5.2) (5.7)
Costco b $6,670.0 $6,050.0 10.0 7.0
Dillard Dept. Stores $4,356.2 $4,498.4 (5.0) (6.0)
Duckwall-ALCO c $314.4 $301.4 4.3 (6.1)
Fred's $1,202.0 $1,157.0 4.0 3.1
JCPenney d $11,368.0 $11,927.0 (4.7) (6.6)
Kohl's Corp. $9,940.6 $9,711.9 2.4 (5.6)
Ross Stores $4,262.0 $3,853.0 11.0 3.0
Stein Mart $862.6 $926.5 (6.9) (10.3)
Target Corp. $39,445.0 $37,674.0 4.7 (1.1)
TJX Cos. $12,200.0 $11,500.0 6.0 3.0
Wal-Mart Stores Inc. e $263,372.0 $241,718.0 9.0 3.4
Wal-Mart stores $165,123.0 $154,744.0 6.7 2.8
Sam's Clubs $31,349.0 $29,244.0 7.5 6.7
International $66,810.0 $57,730.0 15.7 NA


Winners and Losers
Same-store sales % change

Winners
Sam's Club 7.4
Costco 7.0
Wal-Mart U.S. 2.0
Fred's 1.1
Losers
Stein Mart -14.8
JCPenney -12.4
Dillard's -12.0
Kohl's -5.5
Duckwall-ALCO -5.3
Bon-Ton -4.6
Target -3.0
Ross Stores -2.0
TJX -1.0


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