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Retail sales jump 6% in November

A strong start to the holiday shopping season signals increasing consumer confidence and raises hopes that the economic recovery is gaining steam.

December 03, 2010|By Andrea Chang, Los Angeles Times

Lured by steep discounts, shoppers stormed the nation's retailers in November — but to keep the momentum going, analysts say, merchants will need to keep pushing discounts.

"Given that there's one less shopping weekend in December, retailers are going to have to be very aggressive to generate demand and get the consumers out there shopping either in the store or online," said Laura Gurski, a partner in the retail practice at A.T. Kearney, a management consulting firm.

The 6% surge in spending was another sign of growing consumer confidence. And unlike the last two years, when frugal consumers shopped mainly for discounts, retailers reported that sales were strong throughout the month, with shoppers picking up more discretionary items, splurging on themselves and more willing to pay full price.

The results surprised analysts who had predicted a modest, 3.6% rise. They attributed the gains to earlier-than-ever holiday promotions, improving economic conditions and pent-up demand by consumers.

"I plan to spend more because I did pretty well this year," Mario Calito, 32, an aerospace engineer, said as he shopped for a laptop computer and Blu-ray movies at a Best Buy in Burbank recently. "I'm very optimistic for 2011."

Retail experts say a good holiday season could speed up the nation's tepid recovery because consumer spending accounts for nearly 70% of U.S. economic activity.

A strong start to the holidays doesn't always lead to a successful season, however, and retail analysts note that things could still unravel. In 2008, for example, healthy Thanksgiving weekend sales weren't enough to save retailers from a rough December and the worst holiday season in more than four decades.

All told, more than three-fourths of retailers beat expectations in November, according to Thomson Reuters, which tallied the results of 27 major chains. The 6% increase over November 2009 was the biggest year-over-year gain for the crucial shopping month since 2007.

Sales were strong across the board at discounters, department stores and specialty apparel stores alike.

"It's good to see consumers out there spending in a number of sectors," said Mike Berry, director of industry research at MasterCard Advisors SpendingPulse. "November isn't really an oasis — we saw good numbers in September and October, so we can certainly be hopeful that they'll continue on through the rest of the season."

The monthly numbers reinforced strong results from the Black Friday weekend. Eager to boost sales, retailers stretched their holiday hours, pushed more deals online and offered fresh discounts on Saturday and Sunday.

That spurred 212 million shoppers to hit the malls and websites during the four-day weekend, up from 195 million last year, according to the National Retail Federation. Shoppers spent an average of $365.34, a 6.4% rise from $343.31 last year. Total spending reached an estimated $45 billion.

"It was crazy," said Jeff Brown, general manager at the Beverly Center, who said the Los Angeles shopping center saw pre-recession levels of traffic on Black Friday. "From 3 o'clock in the morning all the way to close, it was just constant foot traffic, much higher car counts, much higher sales across the board than last year."

Retailers say they're ready and armed with a month's worth of new discounts and special offers.

"We have a strong product assortment planned for the rest of the holiday season and strong value messages that really differ from weekend to weekend," said Jim Fielding, president of the Disney Store chain. "We have a plan in place for now right until Christmas Day."

Among the best performers in November were Abercrombie & Fitch, whose sales soared 22%; action-sports retailer Zumiez, which reported a 20.7% rise; Limited Brands, with a 10% gain; and JCPenney, up 9.2%.

Continuing a recent comeback by luxury shoppers, higher-end sellers reported solid sales. Nordstrom posted a 5.1% increase, and Saks saw sales rise 5.3%.

Results are based on sales at stores open at least a year, known as same-store sales and considered an important measure of a retailer's health because it excludes the effect of stores' openings and closings. Discount giant Wal-Mart no longer reports sales on a monthly basis.

Weaker performers reported only small declines. Teen retailers Hot Topic posted a 2.1% decline; Aeropostale reported a 1% drop; and American Eagle Outfitters saw flat sales. Still, teen apparel was the strongest sector last month.

After buying a 42-inch flat-screen television at Wal-Mart, Cheryl Smith, 57, headed to a Kohl's in Ontario, where she was pushing a cart full of home furnishings and jewelry.

The church bookkeeper said she was spending a little more on the holidays because she was feeling more financially stable, even buying a new home recently.

"It's been a good year for my husband and I," she said. "Our jobs are secure, and with all of our kids coming home we want it to be extra special."

Others said that, although they're feeling more confident, they're still not spending wildly. Sheri Fults, 52, a literary manager from Hollywood, said she hadn't decided how much she would spend on the holidays but knew she wanted to remain cautious.

"I'm feeling tentative about making long-term investments next year," she said, "because I don't know which way the economy is going to turn."

andrea.chang@latimes.com

Times staff writers Shan Li and Rick Rojas contributed to this report.

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