Shop Talk

Retailers, consumers and prices

Check Out Line: Flashback to … yesterday

October 9, 2009

Check out the ongoing debate about September’s same-store sales results and how the numbers beat expectations.

tgtYesterday, we found out that September same-store sales rose 0.6 percent, surpassing a forecast for a decline of 1.1 percent, according to Thomson Reuters data. When all was said and done, 78 percent of retailers that report monthly same-store sales posted results that beat Wall Street estimates, also according to Thomson Reuters.

So how was Wall Street so far off in its estimates?

Well analysts, economists and industry watchers we talked to cited a number of factors — the late Labor Day pushing back-to-school sales into September, cooler weather putting shoppers in the mood to buy Fall merchandise, easier comparisons to last year when sales began to fall off a cliff in the wake of the financial crisis, and retailers finally getting inventory in line with lower consumer demand.

“The Labor Day shift, cooler weather and start of easier comparisons all contributed to the upside,” wrote Pali analyst Amy Noblin in a note to clients on Friday morning.

“It is hard to walk away from a month with such broad-based strength and not feel marginally more confident about the consumer despite the fact that unemployment is still high and credit remains an issue,” she added.

Meanwhile, Lazard Capital Markets analyst Todd Slater said the larger question is, why didn’t more retailers beat expectations? 70 percent of the retailers he covers beat expectations.

“Our Beat-O-Meter came in at 70%, meaning that 7 of 10 retailers exceeded consensus comp expectations, begging the question: With benefits from the Labor Day shift, easing comparisons, and cooler weather, how did 30% not beat?” he wrote.

But Slater cautioned October may have a tough time sustaining September’s momentum.

“Based on our analysis, when retailers beat expectations by a large margin in one month, they usually miss consensus numbers in the following period (71% of the time), which simply means that expectations tend to get ahead of themselves pretty quickly,” he noted.

Also in the basket:

Shoes, bags prove staying power in luxury crisis

Kimberly-Clark to buy I-Flow for $324 million

H&M’s September sales seen up 2 pct yr/yr

Naomi Campbell Collaborates With Vuitton for Charity (WWD, subscription required)

(Photo: Reuters)

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