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September retail sales decelerate

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NEW YORK — Retail sales growth decelerated in September, but not enough to dampen hopes for a solid holiday season.

Retail sales growth decelerated in September, but not enough to dampen hopes for a solid holiday season.

Among 22 retailers tracked by the International Council of Shopping Centers, sales for the month rose 3.9%, down from a 6% increase in August.

Same-store results at Target Corp. met management’s expectations but fell just short of Wall Street’s. The company’s 2.1% rise did not quite match the 2.2% growth expected by analysts.

"We’re pleased with our sales results through the first two months of the quarter and believe we remain on track to attain our third quarter sales and profit goals," said chairman, president and chief executive officer Gregg Steinhafel in a statement.

Target also announced it would cease reporting monthly sales beginning with its 2013 fiscal year. Neither Walmart nor Kmart report monthly sales any longer.

Costco Wholesale Corp., on the other hand, was pleasantly surprised by a 6% increase in overall same-store sales that mirrored results at its domestic warehouses. Costco’s international units turned in a 7% rise.

The retailer acknowledged that both gasoline prices and foreign currency exchange had positive impacts on the top line. Excluding those factors, companywide and domestic same-store sales grew 5%, while sales from international warehouses expanded 6%. Analysts polled by Thomson Reuters forecast a 5.7% gain, including the impact of fuel prices.

Among regional discounters, Fred’s Inc. booked a 3.8% drop in same-store results compared with a 1.1% increase last year. "In September we experienced the impact of an accelerated shift in sales of brand name drugs to generics within the pharmacy department," said chief executive officer Bruce Efird. "Clearly, the impact of generic pricing on the major brand conversions was dramatic, with the effect on the overall comparable-store sales being more than 300 basis points. Historically, market changes occur over a period of six to nine months. Consistent with the most recent conversions, these changes have occurred at a much more rapid pace, involving a period only 30 to 45 days. On a positive note, pharmacy script count continued to grow, and the department remains on forecast."

Efird added that sales of such general merchandise categories as tobacco, soft lines and fall seasonal products also contributed to the same-store downturn, with tobacco accounting for 75 basis points of the decline. "Our key departments, such as pet, celebration and party, auto, hardware and food, performed well during the month," he elaborated.

At Abilene, Kan.-based Alco Stores Inc., same-store sales excluding fuel fell an identical 3.8%. President and CEO Rich Wilson pointed to slowed consumer spending coupled with changing weather patterns.


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