Retailers Missing Modest November Sales Expectations

The vast majority of retailers reporting November same-store sales have missed analysts' muted expectations after last year's plunge, and the industry as a whole may even post results below prior-year levels.

The performance comes after what many viewed as a mixed kickoff to the holiday shopping season, with shoppers on average spending 7.9% less than the Black Friday weekend of 2008, according to the National Retail Federation. In general, lower-priced items were favored.

That continues a trend of less-expensive retailers, be they discounters or lower-priced apparel sellers, outperformaning other chains the past year. But Costco Wholesale Corp. (COST) saw weakness in November after two months of solid growth, as same-store sales were flat in the U.S. excluding gasoline for the warehouse club. Its shares fell 2.5% premarket.

Smaller rival BJ's Wholesale Club Inc. (BJ), which has been outperforming Costco of late, also reported weaker-than-expected results with its 1% growth. Its stock dropped 1.6%.

This November's results follow last year's 7.8% slump, excluding Wal-Mart Stores Inc. (WMT), according to Thomson Reuters, as the stock market swooned. Wal-Mart stopped issuing monthly sales figures earlier this year.

A modest 2.1% increase was expected for this November, but more declines were seen for the teen/child and department-store segments. But results are tracking around break-even, said Thomson Reuters.

"It's still early, but it looks as if the litany of Black Friday and Cyber Monday surveys did not exactly paint a clear picture of start to the holiday selling season," said Wall Street Strategies analysts Brian Sozzi. He added that temperatures were generally warmer than normal, pressuring cold-weather products.

But because the sales reports weren't weren't accompanied with profit warnings, he noted the help of online sales partially offsetting store weakness and lower costs appear to be helping.

Limited Inc. (LTD) surprised analysts for the second time in three months by posting same-store sales growth--3% in November after a 12% slump last year. A gain posted in September was the first for the Victoria's Secret and Bath & Body Works parent in two years. The company said it saw "record sales" on Black Friday, helping Limited avoid a potential same-store-sales drop for November. It added merchandise margins were "up significantly" in the month.

As it did for November, Limited projected December same-store sales falling by the low- to mid-single digits on a percentage basis.

Pier 1 Imports Inc. (PIR), which has been posting improved results this year after a string of loses earlier this decade, said same-store sales for its fiscal third quarter ended Saturday jumped 14% after last year's 18% tumble. President and Chief Executive Alex Smith said the home-furnishings company saw building strength throughout the quarter, "culminating in a very strong Thanksgiving weekend." Shares jumped 15% premarket.

While Gap Inc. (GPS) reported flat results, in line with expectations, teen apparel chain Abercrombie & Fitch Co. (ANF) posted a much bigger-than-expected 17% slide in November same-store sales. And Children's Place Retail Stores Inc. (PLCE) reported a 13% swoon, not the average 1% gain analysts anticipated. Its stock fell 9.8% while Abercrombie dropped 7.4%.

-By Kevin Kingsbury; Dow Jones Newswires; 212-416-2354; [e-mail]