October Sales Stronger Than Expected

Retail

As of Thursday, November 7, 2013

“Sales trends are seemingly back on track,” said economist Michael Niemira regarding business in October.

Some forecasts for the month’s sales were bleak, but an index for International Council of Shopping Centers, a leading trade group for shopping centers, showed that U.S. chain-store sales increased 4.1 percent in October compared with the same time in the previous year. It was stronger than expected. October’s performance bodes well for upcoming sales.

“Overall, the monthly gain is encouraging for retailers as we head into the important holiday shopping period. It would appear that the consumer has come back, just at the right time,” Niemira added.

Other Wall Street analysts agreed October’s retail sales results exceeded expectations. Adrienne Tennant of Janney Capital Markets credited increased sales at fashion retailers to the weather turning from warm to more-brisk, fall-like temperatures across much of the United States.

However, October’s gains were not entirely strong. In a Nov. 7 research note, Tennant wrote that improved comps might have been built on promotions and big discounts at retailers. Wall Street analysts often consider selling clothes at full price as a sign of optimum financial health for retailers.

In another sign of good health for the American economy, the U.S. Department of Commerce reported Nov. 7 that the country’s real gross domestic product increased 2.8 percent in the third quarter of 2013. In the previous quarter, the growth rate was 2.5 percent.

However, growth of personal income declined during the same period, the Commerce Department said. Real disposable personal income increased 2.5 percent in the third quarter of 2013 after increasing 3.5 percent in the second quarter.

October was a great month for L Brands, the parent company of Victoria’s Secret. Wall Street analyst Ike Boruchow of Sterne Agee said that the 8 percent comp-store-sales increase for L Brands was well above expectations for 2 percent to 3 percent and represented the best performance of the year for the company.

Also on Nov. 7, contemporary retailer Bebe Stores Inc. released results for its first quarter of its fiscal 2014 year. Net sales were $114.1 million, which represented a decline of 2.6 percent from $117.1 million from the same time in the previous year. Same-store sales declined 2.8 percent. There was a same-store-sales decline of 8.7 percent in the same time in the previous year and a decline of 7.1 percent in same-store sales in the fourth quarter of fiscal 2013.

A Bebe statement said there had been an increase in store traffic in the quarter that had just ended. “Fiscal first-quarter 2014 marks the beginning of our turnaround journey,” said Steve Birkhold, Bebe’s chief executive officer.