The US retail stocks collapsed to their lowest levels since 2005 on Friday due to weak sales in August. The US unemployment rate which rose to its peak level in almost five years was one of the main reasons for the weak consumer behavior.
"Consumers are very focused on value, stretching their dollars, and anything deemed not absolutely of need, they are forgoing those purchases," said Ken Perkins, president of Retail Metrics.
The luxury sector posted worse-than-expected sales in the month. Major department-store operators all fell, led by Saks Inc.
Saks Inc (NYSE: SKS) and Nordstrom Inc (NYSE: JWN), which were reportedly exposed to financial market stress, have reported 5.9 percent and 7.9 percent slump in their August sales, respectively. Saks' share value declined 0.53 percent to $11.27, and Nordstrom lost 4 percent to $31.99.
Higher-priced teen chain Abercrombie & Fitch Co (NYSE: ANF) reported an 11 percent decrease in its same-store sales compared to the 7.9 percent decline analysts expected. Citigroup downgraded Abercrombie & Fitch to Sell from Buy. The firm predicts that the retailer's 2H08 EPS will fall short of the company's guidance and the consensus estimate. Merrill Lynch also downgraded ANF from Buy to Underperform. Rivals Hot Topic Inc and American Eagle Outfitters Inc have also posted declines of 2.7 percent and 5 percent, respectively.
However, the world's leading retailer Wal-Mart Stores Inc stood as an exception reporting a 3 percent increase in its same-store sales the four weeks ended August 29, against analysts' expectations of 1.6 percent.
Wal-Mart (NYSE: WMT) proved to be an exception to the market trend, as
consumers sought back-to-school deals. The retailer reported strong sales of
medicines, groceries, and other household goods. Total company sales for the
month increased 8.7% to $30.7 billion
. Wal-Mart's September sales are now
expected to rise between 2% and 3%. S&P reiterates buy recommendation
of Wal-Mart stores. The firm expect September comp-store sales to grow 2.9%,
near high end of Wal-Mart's 2%-3% guidance range.
Mall-based specialty retailer of casual apparel Aeropostale (NYSE: ARO)
also reported a 13 percent
increase in its same-store sales beating
expectations of 6.9 percent.
According to the International Council of Shopping Centers, total US chain store sales were up 1.7 percent for the month of August on a year-over-year same-store basis.
"The slower than trend August sales pace was touched by weakness in the economy, cold and wet weather, a later start to the school year and lean inventories. For the industry as a whole, we expect September sales to post an increase of about 2%," said Michael Niemira, ICSC's chief economist."
Other losers are Macy's Inc (NYSE: M), which fell 4% to $21; Kohl's Corporation (NYSE: KSS), down about 2% at $51.50; and Sears Holdings Corp, off more than 3% to $92.28.
Disclosure: Author does not own any stocks mentioned in this release.