Bloomberg News

Target, Limited Help September Retail Sales Beat Estimates

October 06, 2011

(Updates shares in fifth paragraph.)

Oct. 6 (Bloomberg) -- Target Corp. and Limited Brands Inc. helped September retail sales beat analysts’ estimates as promotions drove consumers to increase purchases amid concerns the economic recovery may stall.

Revenue at Target, the second-largest U.S. discounter, climbed 5.3 percent, surpassing the average projection for a 3.9 percent gain from analysts surveyed by Retail Metrics Inc. Limited Brands, owner of the Victoria’s Secret chain, posted an 11 percent increase in same-store sales, beating the 4.9 percent average estimate.

Retailers offering discounts and promotions helped lure shoppers and allay concerns that the global economy may slide into another recession. September’s results may bode well for the holiday shopping season that begins in November, said Ken Perkins, president of Retail Metrics.

“It’s setting up well for retailers, barring an implosion in Europe,” Perkins said. “Retailers are pulling out all the stops to drive traffic with deep discounting. Consumers need to be enticed to shop and that’s what is happening.”

Target rose $2.15, or 4.3 percent, to $51.91 at 4 p.m. in New York Stock Exchange composite trading. Limited advanced 31 cents to $40.59.

Sales for the more than 20 chains tracked by Swampscott, Massachusetts-based Retail Metrics rose 5.8 percent, the 25th straight gain, and surpassing projections for a 4.9 percent increase. Retailers have beaten projections every month this year.

Higher Costs

Most chains count locations open at least a year to tabulate same-store sales. The revenue is a key indicator of a retailer’s growth because new and closed sites are excluded.

Shoppers also faced higher prices as retailers passed along increased costs for labor and raw materials, said Ken Stumphauzer, a retail analyst for Sterne Agee & Leach Inc. in New York.

“It’s incongruent with what’s going on in the market,” Stumphauzer said in a telephone interview today. “It suggests that the U.S. economy is fine.”

Luxury chains Nordstrom Inc. and Saks Inc. surpassed estimates as high-end shoppers continued spending amid the volatility in global stock markets.

Department store chains Macy’s Inc., Kohl’s Corp. and Ross Stores Inc. also exceeded estimates. Among discounters, Costco Wholesale Corp., the largest U.S. warehouse-club chain, and TJX Cos. also posted gains that beat projections.

J.C. Penney, Target

Gap Inc., the largest U.S. apparel chain, continued to struggle to improve its business in North America as sales at all three of its brands declined. Overall same-store sales fell 4 percent, missing a projection for a drop of 3.7 percent.

J.C. Penney Co., the third-largest department store chain, posted a sales decline of 0.6 percent, missing estimates for a 0.9 percent gain. The retailer also lowered its third-quarter profit forecast to as much as 15 cents a share, down from a maximum of 25 cents.

Target’s sales exceeded expectations with gains in several categories, Chief Executive Officer Gregg Steinhafel said in a statement. Same-store sales in October will increase in the low- to-mid single digits, the company said on a recorded statement.

Limited’s Bath & Body Works brand posted a sales gain of 12 percent, surpassing a projection of 1.3 percent, because of increases in home fragrance and anti-bacterial products.

--With assistance from Courtney Dentch in New York. Editors: James Callan, Kevin Orland

To contact the reporter on this story: Matt Townsend in New York at mtownsend9@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net


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