The Time of the Tough Comparisons Bears Down on Some Retail Results
Home Textiles Today Staff -- Home Textiles Today, 12/11/2010 5:46:56 AM
If the monthly comps sales reported last week for October weren't dazzling, bear this in mind: October 2009 was one of only three months during which the over comp was positive during the first 10 months of the year.
Several of last year's high fliers are bumping up against devilishly tough comps now. Last month, TJX reported fl at comps (and that was at the high end of its expectations), but in October 2009, TJX's comps were up handsomely, +10%. Home comps at TJMaxx/Marshall's were up 14%, and the HomeGoods chain rang up an 18% comp gain. Those are tough numbers to beat at a time when consumers are being very careful with their money.
A year ago, the numbers were so encouraging that TJX, Ross Stores, JCPenney and Jo-Ann Stores all raised their profit forecasts. Despite smaller gains last month, TJX and Ross both raised their earnings outlook.
Last year, the talk was about consumers shifting their priorities to pay down debt. They still are, according to a recent report from the Capital Access Network, but at a slower pace. For the third quarter of 2010, consumers reduced credit card spending at brick-and-mortar retailers, service providers and restaurants by 5.06% -- a far cry form the 14.8% drop in the third quarter of 2009. Maybe consumers feel they're getting a handle on their debt...or maybe they're conserving cash against the possibility of job loss.
The America's Research Group/UBS Consumer Mind Reader Survey released earlier this fall found only 14.8% of consumers consider their bills and debts to be a big problem, down from 23.3% going into the fall in 2009.
However, close to half the 1,000 consumers surveyed said they were worse off than last year, and America's Research Group said it had seen the weakest rating in more than 20 years for planned purchases of $1,000 or more.
ARG's outlook for the holiday season: "dismal." But it must be noted ARG tends to forecast conservatively. Last year, it adjusted its initial projection upward to a sales decline of 1.2%. Holiday sales actually grew (barely) by 0.4%.
The National Retail Federal is forecasting a 2.3% growth in holiday sales in 2010. Last year, NRF predicted a 1.0% decline.
So we shall soon see. Will Christmas be scarier than Halloween? Or will consumers be enticed by all the promotions to dig a little deeper than they had planned?
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