Wal-Mart Stores is the first company to offer price discounts for the holiday season. The Bentonville, Ark., based company is offering the latest Furby doll for $29.88 – $10 below the competition – and is undercutting competitors by $20 on a Fisher-Price ride-on version of the Cadillac Escalade, The New York Times reports.
Apparel retailers will also offer bigger discounts earlier in the holiday shopping season, John D. Morris, an analyst for Harris Nesbitt told the Times. So far this year, he said, clothing stores have increased markdowns by 10 percent over 2004.
Plans for discounting are being made as retailers are reportedly reacting to an industry sales report released Wednesday for September, the first full month to register the impact of gas prices at $3 a gallon in the wake of two hurricanes, which caused already high gas prices to spike.
American consumers increased sales at discount and membership club stores but fuel-conserving shoppers skipped the specialty stores at the mall, resulting in bleak clothing sales, the Times reports.
Retail sales rose 3.9 percent at stores open at least a year, beating expectations, according to the Goldman Sachs Retail Composite Index, released Thursday. But analysts reportedly warned that an overall gain in September may mask shaky consumer confidence and pinched budgets, the Times reports.
Both Federated Department Stores and Talbots, which cater to middle-income consumers, pointed to rising fuel prices in explaining disappointing sales. Federated’s sales rose 1.3 percent; Talbot’s fell 5.1 percent.
Terry J. Lundgren, the chief executive of Federated, which just completed its $11 billion purchase of May Department Stores, also blamed Hurricanes Katrina and Rita and “dampened consumer confidence.”
A Gap spokeswoman told the Times the chain did not discuss its discount plans. Talbots reportedly said it had begun additional discounting, but declined to talk about how it would discount for the rest of the season.
Talbots reportedly said it would cut its full-year profit forecast to $1.67 to $1.71 a share, down from its previous forecast of $1.87. Talbots said “concerns about rising fuel prices and the economy have created a more conservative mind-set” among shoppers.
Sales at Chico’s FAS, a Talbot’s competitor, rose 15.8 percent. Referring to the sluggish Talbots performance, Margaret B. Whitfield, an analyst at Ryan Beck, told the Times that “the Chico’s shopper is similar in age and similar in income, and she was shopping.”
Upscale department stores reported solid sales increases. Sales rose 9.6 percent at Neiman Marcus, 4.1 percent at Nordstrom and 3.2 percent at Saks.
Wal-Mart Stores, the nation’s largest retailer, reportedly said sales rose 3.8 percent, but it said the hurricanes would slice a penny from its third-quarter earnings per share. The chain’s Sam’s Club division, which sells gas, reported a 9.8 percent sales increase in September, well above its average monthly gain of 4.8 percent earlier in the year.
Costco also received a boost from rising gas prices, with sales up 11 percent, compared with an average monthly increase of 7.6 percent so far this year.
For chains in the nation’s malls, it was a different September. Gap, which also owns Old Navy and Banana Republic, fell 6 percent. Unlike Federated and Talbots, Gap reportedly blamed itself, citing challenges with customer “traffic and product performance across all brands.”
Teenage fashion chains reported strong sales for September. Sales at American Eagle Outfitters rose 13 percent and those at Abercrombie & Fitch jumped 21 percent, led by denim sales.