November sales may fall despite Friday's buying

NEW YORK — Shopping binges on the day after Thanksgiving were likely not enough to save a dismal November for retailers, leaving them with what's expected to be a second straight monthly sales drop and fueling concerns about how much consumer spending can fall.

Sales data from the Thanksgiving weekend showed a surge in buying on Friday that fizzled fast for the rest of the weekend, with consumers worried about the economy focusing on deals and sticking to their lists as they slashed their holiday budgets.

"It's a hard time. We don't know what's going to happen," said Roxanne Lopez, a police detective from Windsor, N.Y., who was shopping for early morning specials at Macy's Herald Square on Friday. She said she planned to cut her holiday spending.

In a trend that disturbs retailers, various surveys also showed that more shoppers had planned to finish their holiday buying this past weekend compared with last year. That means merchants may have to be even more aggressive about cutting prices in the final weeks to pull shoppers into their stores, a move that would further depress earnings.

Overall retail profits for the fourth quarter are expected to fall 15.6 percent from the year-ago period, says Ken Perkins, president of research company RetailMetrics LLC. — marking what would be the seventh consecutive period of shrinking profits.

"Consumers are much more frugal and focused," said C. Britt Beemer, chairman of America's Research Group. He said far more shoppers the company spoke to on Sunday said they needed three days or less to complete their holiday buying than had said so a year earlier, and that a higher percentage of shoppers had completed 75 percent of their shopping on Friday.

The Goldman Sachs-International Council of Shopping Centers sales index of retailers is expected to drop 1 percent for November, slightly worse than the 0.9 percent decline in October. That would be the weakest November performance since at least 1969 when the index began, according to Michael P. Niemira, ICSC's chief economist. The index is based on same-store sales, or sales at stores open at least a year, which are a key indicator of a retailer's health.

Niemira described Friday's sales boost as "just OK," adding that there was a lot of bargain buying. The pace, he believes, can't be sustained.

Many retailers, particularly department stores and clothing merchants, are expected to post same-store sales drops of at least 10 percent, according to Jharonne Martis, an analyst at Thomson Reuters. Wal-Mart Stores Inc., the world's largest discounter and among the few bright spots in retailing, is expected to report a 2.2 percent gain in same-store sales, according to Thomson Reuters.

One factor that will hurt the November figures is a quirk in the calendar — a late Thanksgiving means that the month's reporting period does not include a whole week of post-holiday shopping compared with a year ago. Niemira estimated that will depress November figures — and benefit December — by 1.5 percentage points to 2.0 percentage points. Niemira expects same-store sales to be up only 1 percent for the November and December period.

But clearly, the deteriorating economy is wreaking havoc on consumers, who since mid-September have basically snapped their wallets shut. The National Bureau of Economic Research — a private, nonprofit organization — declared on Monday that the U.S. recession began last December, though consumers already felt they were in a downturn well before it became official as they face eroding household wealth and worry about job security.

A big concern is massive layoffs,which are only expected to increase in months ahead. The nation's unemployment rate soared to a 14-year high of 6.5 percent in October as another 240,000 jobs were cut. But for November, job losses are expected to climb to 320,000 and the unemployment rate is expected to hit 6.8 percent when the Labor Department reports figures Friday, according to economists surveyed by Thomson Reuters.

Another worry for merchants is that more shoppers who have either maxed out their credit cards or who are trying to manage their money better are using cash to pay for gifts — a move that is expected to depress impulse buying.

Carmen Landgrave arrived at a Wal-Mart store in Phoenix on Friday with $200 in cash, leaving her credit card at home. Landgrave said she's holding back from repeating a pre-Christmas spending binge last year that filled her husband's pickup truck.

"No more money," Landgrave said. "I didn't want to pay the interest this year."

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Associated Press Writers Chris Kahn in Phoenix and Cristian Salazar in New York contributed to this report.

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Retailers expect to report dismal November sales

Associated Press

Tue Dec 2

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