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Retail sales continue slow climb in September

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NEW YORK — Retail sales beat expectations in September, rising 0.6% over August sales and 7.3% over September 2009, according to Commerce Department figures.

Retail sales beat expectations in September, rising 0.6% over August sales and 7.3% over September 2009, according to Commerce Department figures.

That marks the third straight month of gains and followed an even stronger 0.7% increase in August over July.

The modest sales increases eased fears, sparked by sales declines in May and June, that the economy was slipping back into a recession. But consumer spending, which accounts for 70% of economic activity in the United States, is still constrained, due to high unemployment rates and the lack of real wage growth.

“After three years of economic strain, three consecutive months of growth is good news,” said Retail Industry Leaders Association president Sandy Kennedy. “But given the size of the challenges the economy continues to face, retailers remain focused on appealing to the budget-conscious consumer, particularly as we enter the holiday shopping season.

“Every aspect of the economy, particularly those industries reliant on consumer spending, remains challenged by the fact that nearly 15 million Americans are unemployed and millions more are underemployed. Without a meaningful improvement in the job market, retail sales gains will be sluggish and hard won.”

September retail sales rose 0.4% over the previous month when autos are excluded. Sales at general merchandise stores, which the Commerce Department defines as including everything from department stores to big-box discounters, were flat in September after increasing 0.5% in August. Electronic and appliance stores posted a 1.5% increase, and sales at furniture stores advanced 0.5%.

“There’s no question that the industry is in a much better state than this time last year,” said National Retail Federation president and chief executive officer Matthew Shay. “However, consumers are still very reliant on sales and promotions. It is encouraging to see increases in key discretionary spending categories, marking a significant change in what retailers experienced throughout the economic downturn.”

September sales gains were led by stronger than expected results at department stores, according to Kantar Retail, which attributes much of the gains in the month to back-to-school spending.

Kantar reported a 2.8% same-store sales gain in September for the 31 retailers — most of them apparel chains — it tracks. That is down slightly from the 3.1% same-store sales gain those retailers posted in August.

“The results suggest that outside of healthy back-to-school spending, shoppers otherwise continue to moderate their spending from a surge in the spring,” said Kantar senior economist Frank Badillo. “This moderation should continue into the holidays.”

Kantar has forecast 2.5% growth for the holiday fourth quarter. That is an improvement over the 0.9% gain in the same period last year but is down from the more than 4% gains retailers posted for the first half of this year.

Target Corp. reported net retail sales of $5.56 billion for the five weeks ended October 3. Same-store sales for the period rose just 1.3%, however.

“September sales were near the low end of our expectations,” said Target chairman, president and chief executive officer Gregg Steinhafel. “We’re pleased with our results in our back-to-school and back-to-college categories, and we continue to see strong performance in grocery, beauty and health care.”

Steinhafel added that Target expects the launch of a rewards program associated with its store credit cards, coupled with the completion of its 2010 store remodeling program, to boost sales in October.

BJ’s Wholesale Club Inc. reported a same-store sales increase of 1.5% in September, which was short of the 2.1% growth expected by analysts.

The warehouse club chain’s total sales for the month advanced nearly 4%, to $961.6 million, driven mainly by strong food sales. Apparel, health and beauty aids and household chemicals were among the categories where BJ’s posted weaker sales.

Discounter Fred’s Inc. reported sales of $169.5 million in September, which is an increase of 2% over the prior-year period. Same-store sales were flat for the month, compared with an increase of 3.3% for September 2009.

“Our sales plan for September anticipated low comparable-store sales against last year’s heavy demand for H1N1, seasonal flu vaccines and flu-related products,” said Fred’s chief executive officer Bruce Efird. “Importantly, customer traffic continued to strengthen during September, with our Core 5 program driving improved sales and margin mix.”

Costco Wholesale Corp. reported comparable sales gains of 2% for its domestic clubs and 4% for the company as a whole, excluding the impacts from gasoline inflation and currency exchange.


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