U.S. retailers are poised to report their weakest monthly sales gains in six months as as the warmest October weather in decades and a still-stumbling economic recovery crimped demand for fall merchandise.
Analysts expect same-store sales to have risen 1.6 percent in October, compared with a 1.8 percent increase last year, according to Thomson Reuters data.
“Unfortunately, this month was abnormally warm. In this economy, where so many consumers are living paycheck to paycheck, it really has become very much a ‘buy now, wear now’ type mentality,” said Ken Perkins, president of research firm Retail Metrics.
“A lot of the ‘buy now, wear now’ sales just didn’t happen because it was too warm,” Perkins said, underscoring that many retailers had already stocked their shelves with fall merchandise, expecting a seasonal dip in temperatures.
Retail chains from Target Corp. to J.C. Penney Co. and Abercrombie & Fitch Co. will report sales at stores open at least year — a closely watched industry gauge known as same-store sales – Wednesday and Thursday.
Consumers, bombarded with a daily dose of mixed economic data, may have chosen to pause from shopping ahead of the holidays, after being enticed by big discounts in the back-to-school season, analysts said.
“With back-to-school shopping essentially ending in September, we would surmise that the month between the conclusion of back-to-school up until Halloween also contributed to a lull between events,” Robert Drbul, an analyst at Barclays Capital, said in a research note.
A report from the Commerce Department Monday showed consumer spending rose 0.2 percent in September after advancing 0.5 percent in August. It was held back by a surprise 0.1 percent decline in income, the first slide since July 2009.
Still, an October sales rise would mark the 14th consecutive month of rising sales for U.S. retailers, after a year of declines during the recession.
On Tuesday, the International Council of Shopping Centers Research said it expects same-store sales for October to rise of 2 percent to 2.5 percent.
Retail stocks have underperformed the wider market in the past month. Since the beginning of October, the Standard & Poor’s Retail Index was up 1.9 percent through Monday, compared with a 3.7 percent increase for the S&P 500.
Monthly sales figures provide a snapshot at many retailers, but are less reliable as a measure of the economy as a whole, since industry Goliath Wal-Mart Stores Inc. and other major retailers includign Best Buy Co. and Amazon.com Inc. do not report monthly sales.
Many analysts such as Lazard Capital’s Todd Slater expect department stores and specialty apparel retailers to report the biggest month-to-month sales declines in October. Gap Inc is expected to a significant underperformer in the month.
