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November retail sales reports show mixed results

By Reuters
Thursday, December 1, 2011 9:44 EDT
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(Reuters) – Major U.S. retailers showed a big rift between winners and losers in November, as a strong turnout on “Black Friday,” the busiest shopping day of the year, encouraged some, while others did not experience the swell of buying they had hoped for.

Early sales and deep discounts gave a big lift-off to the holiday shopping season for chains such as Macy’s Inc, while weak results at Target Corp and Gap Inc show that shoppers remained selective.

“The consumer has become insanely focused on promotions,” said David Bassuk, head of the global retail practice at AlixPartners. “The consumer is willing to spend money, that’s the good news. But consumers needs to be convinced.”

Eight of the 13 retailers that have so far reported November sales beat expectations, according to Thomson Reuters data.

Sales at stores open at least a year, or same-store sales, were expected to rise an average of 3.1 percent at 22 chains tracked by Thomson Reuters. In November 2010, such sales jumped 5.5 percent.

Shares of Limited and Macy’s were up in premarket trading, while Target’s shares were down.

Retailers now must do what they can to see profitable gains for the rest of the holiday season — a difficult task as many industry watchers expect that shoppers under financial stress will hold back after their weekend binge.

Gap’s same-store sales fell 5 percent, deeper than the 4.3 percent decline analysts expected, as the company’s discounts were not as aggressive as analysts said they wanted to see.

“This is just the start of the holiday selling season and we expect December to remain fiercely competitive and highly promotional,” said Glenn Murphy, chairman and chief executive officer of Gap.

Over at Target, people who bought did spend more, but fewer came out and made purchases. Toys, music and movies were among the worst performing categories, it said.

Target also said it expects a “competitive and promotional environment” to persist in December with the main focus still on value.

Total retail sales for the weekend reached an estimated $52.4 billion, up from $45 billion last year, according to the National Retail Federation.

“Clearly, retailers bent over backwards to juice sales up for the holiday weekend,” using tactics such as earlier door- buster sales, said Kurt Salmon retail strategist John Long.

He plans to closely watch traffic at stores this coming weekend to see if Black Friday was a sustainable trend for the season or just an anomaly.

Retailers’ margins could be under pressure if they continue to resort to deep discounts to entice buying.

Macy’s said it still expects same-store sales for the full fourth quarter to rise 4 percent to 4.5 percent, but said it could exceed that forecast if November’s trends continue.

Costco Wholesale Corp said its same-store sales rose 9 percent, topping the 6.5 percent rise analysts expected due in part to higher gasoline prices.

Limited Brands Inc also surpassed analysts’ views. The owner of the Victoria’s Secret and Bath & Body Works chains also announced that its board declared a special dividend of $2 per share to be paid this month.

Sales growth at Buckle Inc, which caters to teens with jeans and other apparel, was stronger than expected.

Wet Seal Inc’s same-store sales fell less than analysts expected. The women’s clothing retailer said merchandise margins at its namesake chain over the holiday weekend were “significantly improved,” while over at the Arden B chain, it is carefully managing inventories as it tries to improve business.

(Reporting by Jessica Wohl and Brad Dorfman in Chicago, Phil Wahba and Dhanya Skariachan in New York; Editing by Maureen Bavdek)

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