US retail sales drop sharply in November
05 Dec 2008
US retailers posted one of the worst monthly sales falls probably in the last three decades in November this year. This was after the Wall Street meltdown led consumers to postpone shopping until Black Friday, when the holiday sales season kicks off.
Basing its results on a survey of 37 retail chains, The International Council of Shopping Centers said this was the biggest drop since it began tracking data in 1969. Further ICSC has said the purchases during November and December the final two months of the year may fall as much as 1 percent, worse than its forecast of a 1 per cent gain.
The 27-company Standard & Poor's 500 Retailing Index has declined 35 per cent this year.
Analysts said that even though gas prices had fallen and personal income remained the same the negative sentiment was driving people to store the money instead of spending it.
Another analyst said the negative consumer sentiment was derived from US being officially in a recession, job cuts accelerating, and events across the globe such as attacks on Mumbai, leading people to worry about the future and hoard whatever extra cash they may have.
The only retailers who stood out in the gloom were discount retailers led by Wal-Mart, Family Dollar Stores Inc. and Big Lots Inc.
Wal-Mart Stores reported a 3.4 per cent rise in November sales that exceeded Wall Street's expectations by more than one per cent at 2.1 per cent. Other leading store chains were not so lucky as more and more Americans just spent money on necessities.
Wal-Mart said the fall in petrol prices helped to leave more money with consumers as a result of which they shopped more at its stores. Also Wal-Mart's aggressive holiday discounts drove "record grocery sales" in November and lifted sales in the home, clothing and electronics categories.
The retailer said it also benefited from higher-income shoppers who had started trading down to its value-priced products. For December, Wal-Mart expects sales to be at the high-end of its forecast for a 1 per cent to 3 per cent gain.
Overall sales in the US fell 2.1 per cent last month and had it not been for Wal-Mart sales would have fallen by a huge 7.8 per cent
The retailers that were hit hardest in November include teen clothing chain Abercrombie & Fitch which registered a 28 per cent fall in same-store sales. Sales at Gap Inc. fell 10 per cent while Limited Brands which owns Victoria's Secret and Bath & Body Works stores, posted a 12 per cent fall in same-store sales.
Target, the biggest rival of Wal-Mart posted a 10.4 per cent sales fall while Macy's sales fell 13.3 per cent. Among high-end retailers, Nordstrom's sales fell 15.9 per cent while Saks sales declined 5.2 per cent.
Upmarket retailers like J.C. Penney Co., Nordstrom Inc. and Gap Inc. all reported sales drops of 10 percent.
Analysts said retailers would have to keep offering large discounts in a big way in December to lure shoppers. However, such sales would cut into margins at a time when retail companies earn one third or more of their annual profit.
In the US the number of people on unemployment benefit rolls rose to 4.09 million in the week ended Nov. 22, the highest since December 1982, according to figures released by the US Labor Department.
